The Bank of England Quietly Stopped Selling Long Bonds, and Three Policymakers Wanted a Hike
- On September 17, 2026 the MPC held Bank Rate at 3.75% by 6-3. Greene, Mann and Pill voted to hike to 4%.
- UK CPI rose to 3.1% in August. The BoE expects about 3.75% in Q4 2026 and slightly above 4% in Q1 2027.
- By 9-0, the MPC rewrote its QE unwind. Gilt sales are paused until April 2027. No more long-dated sales. £120 billion of gilts maturing 2049 and later will be kept permanently.
- Of the £488 billion portfolio, £222 billion maturing before 2035 will be held to maturity. £146 billion maturing 2035-2049 will be sold at about £20 billion a year. Holdings reach zero by about 2034.
- 30-year gilts rallied sharply on the news, and yields fell to a three-week low.
The vote was the headline. The balance sheet was the news.
The Bank of England kept Bank Rate at 3.75% on Thursday. The split was 6-3. Megan Greene, Catherine Mann and Huw Pill voted for a hike to 4%. They argued energy prices are tracking the BoE's own adverse scenario and could feed into wage deals before spring 2027. The six-member majority argued that indirect energy pass-through has been weaker than expected and that slack in the economy will hold prices down.
UK CPI rose to 3.1% in August. The BoE expects it to reach about 3.75% in the fourth quarter and slightly above 4% in early 2027. With a forecast like that, a 6-3 hold is closer than it looks.
The bigger decision came in a separate, unanimous vote on the Bank's £488 billion stockpile of government bonds from its quantitative easing years.
What the Bank changed
| Slice of the portfolio | Amount | New plan |
|---|---|---|
| Gilts maturing before 2035 | ~£222 billion | Held to maturity, no sales |
| Gilts maturing 2035-2049 | ~£146 billion | Sold at about £20 billion a year, from April 2027 at the earliest |
| Gilts maturing 2049 and later | ~£120 billion | Kept permanently to back banknote issuance |
All active sales are paused until April 2027 while the Bank consults on a new route: selling directly to the Debt Management Office. Governor Andrew Bailey summed it up: the MPC and Bank "have decided to withhold a substantial part of the stock of gilts held for monetary policy purposes from sale while the remainder will be unwound over the next eight years."
Why this matters beyond the UK
The long end of the bond market had become a pressure point. Earlier this month, UK 30-year yields hit their highest level since 1998. We covered that in Europe's bond-market stress. One reason is structural: UK pension funds that used to buy long gilts have been winding down their demand. At the same moment, the government was issuing more debt and the central bank was selling. Removing the Bank's sales from the longest maturities takes out one of those sellers.
Markets got the message. Long-dated gilts rallied sharply after the announcement, and 30-year yields fell to a three-week low.
Other central banks face the same problem. The Fed, the ECB and the BoE all hold large QE portfolios. All three are dealing with heavy government borrowing and higher long-term yields. The BoE was the one major central bank actively selling its QE bonds instead of just letting them mature. Now it has explicitly taken its longest bonds off the table. Watch whether that idea shows up in Fed and ECB discussions.
What it means for investors
- UK and global bond funds: less forced selling at the long end is a modest support for long-duration bond prices. It doesn't change the bigger drivers, which are inflation and government borrowing.
- Pound sterling: a hold with three hike votes, plus a gentler unwind, sends mixed signals. The inflation forecast above 4% keeps a 2026-27 hike live.
- Canadians with UK exposure: most Canadian investors hold the UK through global or international ETFs, where it's usually a single-digit slice. The more useful lesson is how central banks now handle long-bond stress. They're willing to step back from selling when the long end wobbles.
The honest uncertainty
Keeping £120 billion of gilts permanently is new, and nobody yet knows how markets will treat a central bank that has quietly stopped fully unwinding QE. It helps now. It may also make investors wonder what the Bank will do the next time long yields spike.
Frequently asked questions
Did the Bank of England raise rates in September 2026?
No. The MPC held Bank Rate at 3.75% on September 17, 2026, by a 6-3 vote. Megan Greene, Catherine Mann and Huw Pill voted to raise it to 4%.
What did the Bank of England decide about gilt sales?
By 9-0, it paused active gilt sales until April 2027, dropped plans to sell long-dated gilts, and decided to keep about £120 billion of gilts maturing in 2049 or later permanently to back banknote issuance. Gilts maturing before 2035 will be held to maturity, and about £146 billion maturing between 2035 and 2049 will be sold at roughly £20 billion a year, bringing monetary-policy holdings to zero by around 2034.
Why did 30-year gilt yields fall?
Because the Bank removed a large, predictable seller from the longest part of the market. Long gilt yields had hit their highest levels since 1998, partly because pension funds no longer buy long bonds the way they once did. Taking the central bank's sales out of that segment eased the supply pressure.
Is this quantitative easing?
No. The Bank isn't buying bonds. It's selling fewer and more slowly, which is a gentler tightening. But by choosing not to sell the longest bonds, it's clearly trying to keep long-term borrowing costs from rising further.
Primary sources
Data & disclaimer: This article is for educational purposes only and is not financial or investment advice. Figures reflect data available as of Sep 18, 2026, and conditions change — always confirm current pricing, rates and rules with the provider before you act. Written by Elizabeta Dimoska. See our editorial standards and disclosure.
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