Part 5/10:
Now, however, the Bank of England is reversing course. Since September 2022, it has been selling bonds back into the private market. This move has two significant repercussions. First, as bonds flood the market, the rising supply decreases bond prices, resulting in higher interest rates. Second, because the bank purchased these bonds at a time of lower interest rates (and correspondingly higher prices), the sales are realized at a loss. Such losses, while inconsequential from a bankruptcy perspective for the central bank, must be reimbursed by the Treasury. Estimates indicate that the losses on bond sales may cost the Treasury £38 billion in 2023 and £40 billion in 2024, starkly impacting the UK's already precarious fiscal condition.