Select committee: Treasury Committee
Conclusion 12
Fifth Report - Quantitative Tightening
Published 7 Feb 2024
Paragraph 69
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)
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 of annual losses. Furthermore, the Bank and MPC do not consider QT to be an active tool of monetary policy and think that it has minimal economic and financial impacts.
From: Treasury Committee, Fifth Report - Quantitative Tightening (HC 219), paragraph 69, 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.