Bank of England-Asset Purchase Facility: Gilt Sales - Provisional Market Notice 4 August 2022.
ENPNewswire-August 8, 2022--Bank of England-Asset Purchase Facility: Gilt Sales - Provisional Market Notice 4 August 2022
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Release date- 04082022 - This Market Notice describes the Bank of England's provisional approach to the sale of gilts held in the Asset Purchase Facility, which would be operationalised following a confirmatory vote by the MPC.
At its May meeting Opens in a new window, the MPC asked the Bank of England (the Bank) to develop a strategy for selling UK government bonds (gilts) held in the Asset Purchase Facility (APF) and committed to providing an update following its August meeting.
In the minutes of its meeting ending on 3 August 2022, the MPC said that it was provisionally minded to commence gilt sales shortly after its September policy meeting, subject to economic and market conditions being judged appropriate and subject to a confirmatory vote at that meeting. The Committee asked the Bank to be in a position to begin a sales programme before the end of September.
In the event that this should proceed, the MPC agreed to set an amount for the reduction in the stock of purchased gilts held in the APF over a twelve-month period from the point at which the policy was voted on, comprising both maturing gilts and gilt sales. The Committee judged that, over the first twelve months of a sales programme starting in September 2022, a reduction in the stock of purchased gilts held in the APF of around GBP80 billion was likely to be appropriate. Given the profile of maturing gilts over this period, this would imply a sales programme of around GBP10 billion per quarter over the twelve months from September.
This provisional Market Notice sets out the key features of how the Bank would achieve such a reduction in the stock of gilts held in the APF over a twelve-month period, if and when voted for by the MPC.
It covers: (1) the Bank's approach to designing a gilt sales plan; (2) liaison with the UK Debt Management Office (DMO); (3) key operational terms; and (4) details of additional information that the Bank will require Gilt-edged Market Makers (GEMMs) to submit on end-client participation in the Bank's gilt operations.
The Bank is providing this information now in order to allow market participants to prepare for the start of any gilt sales. Further provisional detail on operational terms and how to participate will be published on or around 1 September 2022.
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