Published by Global Banking & Finance Review®
Posted on November 18, 2025
2 min readLast updated: January 20, 2026
Add as preferred source on GoogleBoE's Huw Pill expects significant reductions in gilt holdings, impacting monetary policy. Sales will continue beyond excess reserves, with no yield caps.
By David Milliken
LONDON (Reuters) -Bank of England Chief Economist Huw Pill said he expected the central bank to reduce the British government bonds it holds for monetary policy purposes to "very low" levels, though it could still retain gilts for other reasons.
The BoE bought 875 billion pounds ($1.15 trillion) of gilts between 2009 and 2021 to support the economy, and has been reducing its holdings since 2022, in part through active sales.
The central bank has not been explicit about how far it will reduce gilt holdings beyond the point when banks no longer have excess reserves with the BoE, which could be reached as soon as next year.
Pill indicated that gilt sales were likely to continue for some distance beyond that point.
"That doesn't mean we won't have some gilt portfolio, perhaps to back banknotes or for structural reasons, but I would say the expectation at the moment is the QE portfolio held for monetary policy reasons will be run to very low levels," he said at an event hosted by French financial services firm Natixis.
The BoE's Monetary Policy Committee voted in September to reduce its gilt holdings by 70 billion pounds over the next 12 months to 488 billion pounds, but Pill had voted to maintain the previous 100 billion pounds a year pace of reduction.
Pill disagreed with a proposal from one participant at the event that the BoE should halt gilt sales when yields rose above a certain point, and said the BoE's commitment not to sell gilts in disorderly markets was enough.
"I would be very cautious about putting a kind of cap, especially a pre-announced explicit cap, on yields," Pill said. "I think that is a target for speculation."
($1 = 0.7605 pounds)
(Reporting by David Milliken and Suban Abdulla)
A central bank is a national financial institution that oversees the monetary system for a country or group of countries, managing currency, money supply, and interest rates.
Monetary policy is the process by which a central bank manages the supply of money, interest rates, and inflation to achieve economic stability and growth.
Yield caps are limits set on the interest rates of bonds, intended to stabilize financial markets and prevent excessive volatility.
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