Bank of England is 'addicted' to bond-buying, says Lords panel

The BoE must spell out more clearly why it is not reining in its huge stimulus in the face of rising inflation, the Economic Affairs Committee in the House of Lords, said in a report

The Bank of England is “addicted” to the nearly £900 billion ($1.25 trillion) bond-buying programme which it has used to steer Britain’s economy through the crises of the past decade, the chair of a parliamentary committee said.

The BoE must spell out more clearly why it is not reining in its huge stimulus in the face of rising inflation, the Economic Affairs Committee in the House of Lords, parliament's Upper House, said in a report.

Like other central banks, the BoE resorted to quantitative easing (QE) in the depths of the 2008-09 financial crisis having cut interest rates, its traditional tool, close to zero.

The stock of mostly government bonds rose through the decade before almost doubling in size since the onset of the Covid pandemic to about £840 billion now. That total is set to hit £895 billion by the end of 2021 when the BoE is due to complete its current round of purchases. EAC chair Michael Forsyth said the programme — equivalent to 40 per cent of the UK’s annual output — required more answers from the BoE about its effectiveness.