The Bank of England will accelerate the unwind of its asset purchase programme over the coming 12 months, according to decisions taken by the Monetary Policy Committee at its September 2022 meeting.
At this meeting, the MPC ruled that the Bank would reduce its gilts holdings in the Asset Purchase Facility (APF) by £80 billion over the year ahead.
To align with this objective, the central bank has announced changes to its Q3 gilt sales programme to meet its new target.
As a result, it will reduce the planned size of the final three gilt auctions scheduled for Q3 from £790 million to £650 million for each of the short, medium and long maturity auctions.
It will continue to monitor the effect of its gilts sales programme on market conditions and gilts pricing and ‘reserves the right’ to make further amendment to its gilts sales programme, should this be necessary.
The BoE will announce the schedule and expected size of gilt auctions for Q4 2023 and beyond following its forthcoming review of its asset purchase programme, which will take place alongside the MPC meeting scheduled for 21 September 2023.
In January, the Bank of England finalised the unwind of £19.3 billion of gilts purchased in September and October 2022 to restore stability after the Truss-Kwarteng mini budget. This budget, on 23 September 2022, prompted a sharp rise in gilts yield and significant “market disturbance” in UK financial markets.
