Thank you to the Money, Macro and Finance Society (MMF) for co-hosting this event today. It’s a little over three years ago that I delivered my last speech on Quantitative Tightening (QT), where again the MMF kindly co-hosted the event.
In my 2023 speech, I set out what the MPC and Bank had so far learnt after nearly a year of delivering the MPC’s first annual QT decision. After another three years of QT progress and learnings, we are now ready to move to the next chapter.
The MPC’s September decision, alongside the set of announcements from the Bank Executive and HM Treasury (HMT), marked a significant step in the approach to unwinding the assets built up through Quantitative Easing (QE) – a process dubbed QT. Alongside the MPC's decision that it would shift to a multi-year path for QT, the Bank Executive and HMT also released a set of announcements relating to how QT would be implemented in future and the Bank Executive set out its long-term strategy for backing current and future banknote issuance.
I will spend some time today walking through the details of those announcements, both from my perspective as an MPC member, and as the Deputy Governor at the Bank with executive responsibility for the Bank’s balance sheet. I will not focus on the continuing transition to a demand driven, repo led balance sheet though – those aspects of the Bank’s balance sheet have been well explained and detailed by my Bank Executive colleagues in recent speeches and publications.
Much of what I’m covering today is the collective view of the MPC and set out in the September decision minutes, though I will share some personal views too on the monetary policy approach, and highlight when I do. I do also want to note that the MPC considered important institutional questions regarding the potential interaction between monetary and fiscal actions and the independence of MPC decision making over monetary policy, which led to a robust discussion.