The Bank of England QT halt announced at noon on 17 September 2026 is the bigger story of the day, even if the interest rate decision grabbed the early headlines. The Monetary Policy Committee (MPC) voted 6-3 to hold Bank Rate at 3.75%, as markets had priced at roughly 80% probability. But the unanimous, 9-0 vote to overhaul quantitative tightening (QT) is what will shape UK borrowing costs for years.
The QT halt: what the Bank actually decided
Under the new plan, the Bank will stop selling long-dated gilts entirely. According to the Governor’s letter to the Chancellor on the Asset Purchase Facility (APF), £222bn of gilts with redemption dates before 2035 will be held to maturity rather than sold into the market. A further £120bn of the longest-dated gilts, those maturing between 2049 and 2071, will also be held to maturity, indirectly backing banknote issuance, with APF auction sales paused in the meantime.
Active gilt sales going forward are set at just £20bn a year, a dramatic reduction. Over the prior four years of QT, the Bank had been running at an annual average pace of gilt stock reduction of £87.5bn, comprising roughly £32bn of active sales plus maturities. The new multi-year plan targets reducing the monetary-policy gilt portfolio by the end of 2034.
The market reaction was swift. Deputy Governor Dave Ramsden noted in a speech on quantitative tightening that 30-year gilt yields fell by around 10 basis points on the announcement, an effect that persisted over subsequent days, with 10-year yields falling by a similar margin and term premia dropping around 7 basis points. For context: since QT began in February 2022, 10-year gilt yields had risen by around 450 basis points in total, of which around 200 basis points was attributed to term premia. The Bank has, in effect, acknowledged that active long-end sales were doing real damage.
My read is that this is not merely a technical adjustment to the pace of balance-sheet reduction. The unanimous vote, the freezing of long-dated sales, and the explicit multi-year runway to 2034 represent a meaningful policy shift. The Bank spent years insisting that QT was separate from monetary policy and had no material effect on yields. The Ramsden numbers rather undermine that position.
Bank of England QT halt in context: the rate hold was almost beside the point
The three dissenters on the rate decision, Megan Greene, Catherine Mann and Huw Pill, voted for an immediate rise to 4%. That is the same three-person bloc, and the same split, as the 30 July meeting, according to the Bank of England’s interest rate decision page. September marks the sixth consecutive hold this year; Bank Rate has been unchanged since it was cut to 3.75% in December 2025.
The policy dilemma is not going away. UK CPI inflation stood at 3.1% as of the 17 September announcement, already well above the 2% target, and the Bank warned it is likely to rise further as energy prices remain volatile. Commodity vessel transits through the Strait of Hormuz fell to just three ships on Wednesday, down from 12 the day before, per Reuters. That kind of supply disruption feeds directly into the inflation picture the Bank is trying to manage.
Money markets are still pricing in four quarter-point increases by the end of 2027, which would lift Bank Rate from 3.75% to 4.75%. The hawks on the committee would not consider that unreasonable.
For what it is worth, the US Federal Reserve raised rates yesterday. Chair Kevin Warsh was blunt: ‘The plain fact is that [US] inflation is too high, and has been for too long. This summer’s inflation readings do not tell me that underlying trends have meaningfully improved.’ The BoE’s majority clearly does not think the UK is at that same pressure point yet, but the minority of three would disagree.
Next’s profit upgrade adds a footnote
Away from Threadneedle Street, Next lifted its full-year pre-tax profit guidance to £1,255m, an increase of £12m on its prior guidance and an 8.4% rise on the previous year, according to data from Quartr’s Next plc earnings summary. Shares rose 3.2% to £150, putting Next at the top of the FTSE 100 risers. The Next plc investor relations page confirms this is the company’s half-year results, with a Q3 trading statement due on 5 November 2026.
The upgrade came with a warning. Next cut its UK sales growth forecast from +2.8% to +2.0% and cautioned Chancellor John Healey directly: ‘Our primary concerns are rising inflation, higher mortgage interest costs and a weak employment market. These worries will only be compounded if they are accompanied by tax increases.’ A retailer forecasting a steady domestic slowdown while the Bank holds rates and inflation climbs is not a reassuring backdrop for the Budget.
The gilt market’s immediate relief at the QT overhaul may fade if the inflation data keeps deteriorating. The real test for the MPC comes not today but in November, when it will have another CPI print, another set of labour market figures, and the Chancellor’s fiscal choices in hand.
