Nearly half of the government bonds purchased under the Bank of England’s Quantitative Easing (QE) programme were bought in 2020-21, when long-term real yields on indexed debt were well below zero and therefore almost bound to entail a sizeable loss to taxpayers. In addition to this expansion of QE, some maturing issues from earlier rounds were rolled over at this time. In so far as QE had the intended effect of raising the prices of the assets bought, the marginal loss per £ increased with the size of the QE programme. There is no evidence that this marginal effect, or the risk that a sizeable QE programme might have a substantial fiscal cost, was taken into account by the Bank’s Monetary Policy Committee or by the Government in its instructions to the Committee.
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Michael Bleaney
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Sir Clive Granger BuildingUniversity of NottinghamUniversity Park Nottingham, NG7 2RD
Enquiries: hilary.hughes@nottingham.ac.uk