The Bank of England (BoE) announced a significant shift in its quantitative tightening (QT) strategy on Thursday, reducing the pace of its government bond sales to £70 billion from £100 billion over the next year. This marks the first slowdown since the central bank began unwinding its gilt holdings in 2022. The Monetary Policy Committee (MPC) voted 7-2 in favor of the adjustment, which aims to minimize disruptions in the volatile gilt market. The decision comes as long-dated gilt yields hit their highest levels since 1998 earlier this month, raising concerns about market stability. Governor Andrew Bailey emphasized that while inflation is expected to return to the 2% target by mid-2027, the UK is ‘not out of the woods’ yet. The BoE also maintained its benchmark interest rate at 4%, aligning with market expectations. Future gilt sales will be skewed toward short- and medium-dated bonds, with a 40:40:20 split, compared to the previous even distribution. Economists suggest this move could ease pressure on the UK bond market ahead of the upcoming budget announcement. Sterling weakened slightly against the dollar following the decision, while 30-year gilt yields edged lower. The BoE also revised its third-quarter growth forecast upward to 0.4%, signaling cautious optimism about the economy.