The Bank of England's Executive has decided to pause Asset Purchase Facility (APF) auctions while it reviews a model for selling gilts to the government. This follows the Monetary Policy Committee's (MPC) decision to unwind gilts held for monetary policy purposes in the APF.
Under the proposed model, HM Treasury (HMT) would instruct the Debt Management Office (DMO) to purchase £146 billion of APF gilts maturing between 2035 and 2049. These sales would occur at market prices and be pre-announced, at an annualised pace of £20 billion a year, in line with the MPC's multi-year unwind plan. Sales are expected to conclude around 2034.
The Bank Executive will retain £222 billion of gilts maturing before 2035 in the APF. Additionally, £120 billion of the longest-dated gilts, including part of the 1.75% 2049 gilt and all gilts maturing after it, will remain in the APF to back banknote issuance.
A review of progress is scheduled before April 2027. Subject to a final decision, implementation could begin to allow incorporation into the DMO’s annual financing remit. The Bank will announce operational details for implementing the MPC's multi-year plan by April 2027, regardless of the final sales method.