The Bank of England's quantitative tightening (QT) program is facing renewed scrutiny following the recent Iran-induced market volatility. Unlike prior crises, the Bank continued selling long-dated gilts even as yields surged, a move proponents argue demonstrates a successful exit strategy. However, the author contends that this approach is suboptimal, suggesting that other central banks' practice of letting QE purchases mature offers a more cost-effective outcome for taxpayers.

The core of the argument rests on the differing drivers of short- and long-dated bond yields. While short-term yields track expected policy rates, long-dated yields are heavily influenced by supply, demand, and regulatory factors. The author posits that the Bank of England's assumption that selling