The Bank of England’s (BoE) Monetary Policy Committee (MPC) has voted to reduce the stock of gilts held in the Asset Purchase Facility (APF) by £100 billion over the next twelve months, to a total of £558 billion.
The BoE will set a schedule of auctions in order to continue to reduce the APF as evenly as possible across maturity sectors, measured in initial proceeds terms. The maturity sectors are defined as gilts with a residual maturity of between: 3-7 years (short), 7-20 years (medium) and over 20 years (long).
The BoE said it will continue to hold auctions in each quarter over the next twelve months with the intention to schedule these auctions towards the start of each quarter. There will be one auction in each of the maturity sectors in each of the first three quarters, while the final quarter (Q3 2025) is likely to consist of only short and medium maturity sector auctions, depending on the movement in gilt prices and the realised distribution of sales throughout the year.
Accordingly, in Q4 2024, the BoE will sell short maturity sector bonds across one auction of £800 million, medium maturity sector bonds across one auction of £750 million, and long maturity sector bonds across one auction of £600 million.
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