The Bank of England is expected to keep Bank Rate unchanged following its meeting this Thursday. The central bank will also make its annual decision on quantitative tightening, with expectations that it will slow the pace of gilt reductions.
Last September, the Bank opted to reduce its gilt holdings by £70bn over twelve months. This year, the anticipated pace is around £50bn. This decision comes as sovereign bond markets face pressure from significant issuance.
Globally, other major central banks are also meeting this week. The Federal Reserve is widely expected by markets to implement a 25 basis point rate hike after recent inflation data. Meanwhile, the Bank of Japan is projected to raise rates by 25 basis points to 1.25 per cent on Friday.
Central bankers are grappling with how to set interest rates amid unpredictable inflation, influenced by factors such as intensifying conflict around Hormuz and rising Brent oil prices above $100.