Quantitative Tightening I 60 Second Economics

Quantitative Tightening (QT) is a contractionary monetary policy used by the Bank of England (BoE) to shrink its balance sheet and reduce the money supply, reversing Quantitative Easing (QE). Under QE, peak assets reached £894.9 billion , which has dropped to a current asset stock of £524.9 billion, while the base interest rate sits at 3.75%. The Monetary Policy Committee utilizes passive QT by letting gilts mature and active QT by selling bonds to institutional investors. Pursued since late 2022, QT controls second-round inflationary effects and restores capacity for future emergency QE.