The Bank of England’s balance sheet has stopped shrinking, despite the recent announcement of gilt sales. Paul Fisher, former BoE official, noted that the balance sheet has not actually been contracting, meaning quantitative tightening has not truly occurred for about a year. The BoE’s balance sheet is roughly £40bn larger than its 2025 low, but this increase is not due to deliberate quantitative easing.

Instead, it reflects the transition to a repo-led system for supplying reserves. The BoE plans to reduce the balance sheet only until reserves reach a 'Preferred Minimum Range of Reserves' (PMRR), which is estimated at £365-515bn. Currently, reserves stand at £638bn, suggesting the PMRR may already be near current levels.

The short-term repo facility allows banks to borrow reserves weekly, paying Bank Rate, which offsets the impact of gilt sales.