The UK central bank’s Monetary Policy Committee (MPC) has voted 7-2 to keep interest rates at 4% and two slow down the pace of the reductions the central bank has been making to its balance sheet.

The Bank of England has put the brakes on its “quantitative tightening” programme of unloading its holdings of UK government debt securities from £100 billion a year to £70 billion to help curb rising bond yields.

The BoE will also skew sales away from long-dated debt securities in an effort to minimise the impact on volatile gilt markets.

The UK central bank grew its balance sheet enormously to support the UK economy via large scale purchases of UK government bonds during the financial crisis.

The BoE’s holdings of UK government debt securities reached a high of £875 billion in 2022.

“At its meeting ending on 17 September 2025, the MPC voted by a majority of 7–2 to maintain Bank Rate at 4%,” said the Bank of England.

“Two members voted to reduce Bank Rate by 0.25 percentage points, to 3.75%. The Committee voted by a majority of 7–2 to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £70 billion over the next 12 months, to a total of £488 billion.”

Central bank governor Andrew Bailey said: “Today we reduced the size of our annual QT target from £100bn to £70bn.

“The new target means the MPC can continue to reduce the size of the Bank’s balance sheet in line with its monetary policy objectives while continuing to minimise the impact on gilt market conditions.”

UK finance minister Rachel Reeves welcomed the central bank’s decision to slow down the pace of quantitative tightening and said it should continue to liaise with the UK’s Debt Management Office “to ensure the bank’s operations do not impact on the government’s wider gilt issuance strategy.”

The central bank added: “At this meeting, the MPC had voted to reduce the stock of UK government bond purchases held for monetary policy purposes by £70 billion over the 12-month period from October 2025 to September 2026.

“The details of the first quarter of the associated gilt sales programme, covering 2025 Q4, were set out in a Market Notice accompanying these minutes.

“Since gilt sales had commenced in 2022 Q4, the Bank had scheduled auctions in order to reduce the APF (Asset Purchase Facility) as evenly as possible across maturity sectors.

“For the year starting 2025 Q4, the Bank would aim to sell fewer long maturity sector gilts than gilts at other maturities, such that approximately 40% of the MPC’s target would be met by selling short maturity sector bonds, 40% by medium maturity sector bonds, and 20% by long maturity sector bonds, measured in initial proceeds terms.

“The MPC had been briefed on these operational arrangements.”