Asset Purchase Facility: Gilt Purchases - Market Notice 3 November 2016

This market notice sets out the details of the purchases that will take place during the second three months of the programme.
Published on 03 November 2016

1. On 4 August 2016, the MPC decided to increase the stock of purchases of UK government bonds, financed by central bank reserves, by £60bn to £435bn.

2. APF gilt purchase operations in the second three months of the programme will commence in the week beginning 7 November 2016. The Bank intends to purchase evenly across the three gilt maturity sectors. The size of auctions will initially be £1,000mn for each maturity sector with the exception of the operation on 8 November 2016, the size of which will be £1,052mn to incorporate the shortfall from the operation on 9 August 2016.

3. The range of gilts eligible for purchase will remain unchanged from previous operations. The Bank will continue, normally, to conduct three auctions a week: gilts with a residual maturity of 3-7 years will be purchased on Mondays; of over 15 years on Tuesdays; and of 7-15 years on Wednesdays.

4. The Bank does not intend to hold a gilt purchase operation on 23 November 2016 (the day of the Autumn Statement). This operation will instead be held on Thursday 24 November 2016. In addition, the Bank does not intend to hold gilt purchase operations during the weeks beginning 19 December 2016, 26 December 2016 and 2 January 2017.

5. The Bank will confirm details of the following week’s operations each Thursday at 16.00. The Bank does not currently intend to purchase gilts where the Bank holds more than 70% of the “free float”, i.e. the total amount in issue minus government holdings. The Bank will, however, continue to keep the gilts eligible for purchase by the APF under review.

6.Download the Monetary Policy Committee meeting minutes ending on 3 August 2016 for additional details.

PDFMonetary Policy Committee Minutes

7. The Bank originally spent £11.6bn purchasing the 1.75% 2017 gilt which will mature on 22 January 2017. Incorporating the reinvestment of cash flows associated with this redemption into the second half of the current programme would temporarily increase the stock of gilts purchased above the target stock. As such, a separate Market Notice will be published on 2 February 2017, alongside the MPC decision, setting out how the cash flows associated with the redemption of the 1.75% 2017 gilt will be reinvested.

8. Other than as amended by this Market Notice, previous Market Notices relating to the Bank’s gilt purchases under the APF will apply. 

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