MNI BRIEF: BOE Mann Says Can't Offset QT Impact With Rate Cut

It is not possible to simply offset the impact of quantitative tightening on financial conditions by cutting Bank Rate, Bank of England Monetary Policy Committee member Catherine Mann said.

QT, which the BOE is engaged in both passively and actively, by running down and selling its gilt stock, is likely to have some tightening effect on monetary and financial conditions. A policymaker could seek to offset this through an extra rate cut, or cuts if the effect was large enough, but Mann argued against doing so.

She also noted, in her remarks at a Fed event, that QT was running towards the point where central bank reserves would shift from being ample to scarce and she said that the MPC would have to consider all these elements of QT when it next decides on how much to do, which will be in September.