Recommendations & Conclusions
5 items
6
Recommendation
Fifth Report - Quantitative Tightening
Rejected
The Bank should develop its forecasting and modelling tools for understanding the impact of QT and look to how these can be integrated into the forecasting and communication process. Given the uncertainty over its effects, the Bank should also Quantitative Tightening 35 update Parliament and the public on QT at …
Government response. The government states the MPC considers QE/QT impact in annual reviews, which it deems appropriate, and includes assessments in quarterly reports. It also notes that Bank staff already use various modelling tools and quantitative analysis for QT impact, with this …
HM Treasury
9
Recommendation
Fifth Report - Quantitative Tightening
Rejected
Given the unusually high extent of gilt sales in the coming years, the Bank and the Debt Management Office should publish more frequent updates on gilt market participant demand and sentiment. (Paragraph 51) The fiscal impact of quantitative easing and tightening
Government response. The government states the Bank already publishes aggregate gilt market demand and auction results, and surveys market participants. However, it rejects the recommendation for the DMO to publish market sentiment updates, arguing it risks negatively impacting market behaviour and falls …
HM Treasury
12
Conclusion
Fifth Report - Quantitative Tightening
Rejected
While the Governor played down the impact that decisions over the pace of QT have on the scale of lifetime gains and losses arising from QE and QT, the evidence presented to us shows that there is some trade-off between the two, and more so 36 Quantitative Tightening in terms …
Government response. The government reiterates that Bank Rate is the primary active monetary policy tool and that the MPC discusses QT parameters annually. It asserts there is little evidence that a different QT pace would significantly alter overall cashflows or total costs …
HM Treasury
15
Recommendation
Fifth Report - Quantitative Tightening
Rejected
In its response to this report, the Bank should set out whether it thinks that all individual rounds of QE have proved to be good value for money considering the later fiscal cost. In any future QE, lessons should be learned about the effectiveness of each round of QE over …
Government response. The Bank rejects the recommendation to assess the value for money of individual QE rounds, asserting the MPC's independence from fiscal considerations; however, the Treasury commits to keeping its approach to cashflow management under review and considering lessons learned should …
HM Treasury
22
Recommendation
Fifth Report - Quantitative Tightening
Rejected
The Treasury should examine whether it is appropriate that ongoing indemnity payments are included in the debt targeted by the fiscal rules, subject to maintaining the credibility of the UK’s macroeconomic framework. For any future rounds of QT, the Treasury and Bank should commit to revisiting whether it would be …
Government response. The government rejects the recommendation to exclude indemnity payments from fiscal rules, stating substantial fiscal costs should not be ignored. It also explains that a deferred asset approach for accounting profits and losses is not feasible due to the UK's …
HM Treasury