The Monetary Policy Committee will vote each month on the amount of asset purchases it judges necessary to meet the inflation target. It will continue to vote on the appropriate level of Bank Rate.

Asset purchases increase the supply of money directly into the wider economy which should boost spending. For example, if a pension fund or life assurance company sells an asset to the Bank this boosts the amount of money in the economy. The seller of an asset to the Bank can spend the new money it receives on goods and services which directly adds to overall spending or it can purchase other assets which will tend to boost asset prices more broadly and provide an indirect spur to spending.

Purchases of assets by the APF should also provide confidence to private sector investors that they can sell assets, reducing concerns about liquidity and stimulating trading activity. That should make it easier for companies to borrow directly from capital markets. The availability of new finance allows companies to make new investments which again will add to aggregate spending.

The scale of asset purchases is guided firmly by the MPC's intention to bring inflation back to the Government's 2% target. With inflation projected to fall below target, the Bank is supplying new money to boost spending in the economy. It is this same commitment to the inflation target that will ensure that the Committee provides a measured stimulus so that the supply of money does not increase beyond what is required to meet the inflation target. If inflation was projected to rise above the inflation target, then monetary policy could be tightened through some combinaton of raising Bank Rate and selling assets back to the market.

More information
Asset Purchase Facility | How asset purchases work |
Amount of assets purchased | Impact of asset purchases | Accountability

Key Resources

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