The Bank of England began to buy government bonds in 2009, and the scale of quantitative easing program reached a peak of 895 billion pounds in 20021and 12, including 20 billion pounds of corporate bonds.
According to the terms reached at the beginning, the British Treasury benefited from quantitative easing, but it must compensate the Bank of England for its losses.
It is understood that since 2009, the Bank of England has transferred 654.38+023 billion pounds of profits to the British Treasury, which is equivalent to the difference between the interest earned by the Bank of England from its bonds and the deposit interest close to zero.
However, after the Bank of England continued to raise interest rates, the price of British government bonds plummeted and the flow of funds has reversed. Last month, the British Treasury paid 828 million pounds to the Bank of England to make up for the losses caused by QE.
The cost will increase rapidly. Last week, the Office of Budget Responsibility (OBR), the British budget regulator, predicted that by the end of March 2028, the government would need to pay 654.38 billion+033 billion pounds to the Bank of England, which would erase the profits previously made by the Ministry of Finance.
The Bank of England predicts that the annual net cash flow from the British Treasury to the Bank of England will exceed 30 billion pounds in 2023 and 2024, which is basically consistent with OBR's forecast. OBR's forecast is based on the fiscal year and uses different assumptions.
Looking forward to 2033, the Bank of England predicts that the cumulative net loss of the quantitative easing program may range from less than 50 billion pounds to nearly 200 billion pounds, depending on the path of interest rates.