Select committee: Treasury Committee
Conclusion 2
Fifth Report - Quantitative Tightening
Published 7 Feb 2024
Paragraph 21
Addressed to HM Treasury
Treasury Committee Quantitative tightening All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
Since it has some bearing on our later conclusions, we note here that the Bank and Monetary Policy Committee (MPC) have determined: that QT is not being used as an active tool of monetary policy; that they are calibrating QT in order to minimise its economic and financial impacts; and that they are carrying out QT with a view to creating space for future balance sheet expansion, such as quantitative easing (QE), should it be needed. We also note that we have received some concern that the Bank needs a good understanding of the economic and financial impacts of QT in order to calibrate its strategy.
From: Treasury Committee, Fifth Report - Quantitative Tightening (HC 219), paragraph 21, 7 February 2024
Government response
The government responded to the whole report on 18 April 2024 (deadline 7 April 2024).
Summary written by Accountability Index from the government's response. It is not the government's own words.The Treasury, the Bank of England and the Debt Management Office each responded separately, and the Committee records that none of its recommendations has been fully accepted.
- The Treasury says evaluating the overall value for money of monetary policy decisions on an ongoing basis "would not support" the MPC's independence, but that it keeps the design of the framework "under review".
- On the debt metric, the Treasury's position is that "substantial fiscal costs should not be excluded"; it says fiscal rules are "not a matter for the Bank of England".
- The Bank says a deferred asset accounting approach "would not be feasible", and that changing the accounting treatment "would not alter the underlying public sector impacts" of QE or QT.
- The Bank is "working at pace to launch an initial version" of a lending facility for insurance companies and pension funds, and says its next MPC QT review is in September.