Bank of England Announces Schedule for Gilt Sales in Q3 2023

Bank of England Outlines Q3 Auction Dates for Gilt Sales to Support Monetary Policy Objectives

(IN BRIEF) The Bank of England has disclosed the schedule for the sales of gilts held in the Asset Purchase Facility (APF) for monetary policy purposes in Q3 2023. They plan to sell a total of £2.37 billion across short, medium, and long maturity sectors, distributed over three auctions in each sector. Auctions will commence on July 3 for short maturity gilts, July 17 for medium maturity gilts, and July 24 for long maturity gilts. The sales aim to reduce the stock of purchased gilts in line with the Monetary Policy Committee’s target. The Bank will monitor market conditions and retain the right to make adjustments to the sales program if necessary. Future sales schedules will be communicated after the MPC’s annual review in September 2023.

(PRESS RELEASE) LONDON, 23-Jun-2023 — /EuropaWire/ —  The Bank of England (BoE), the UK’s central bank, has released a Market Notice outlining the schedule for the sales of gilts held in the Asset Purchase Facility (APF) for monetary policy purposes in Q3 2023.

During this quarter, the Bank plans to sell a total of £2.37 billion across short, medium, and long maturity sectors, spread across three auctions in each sector. The auctions will commence on 3 July for short maturity gilts, 17 July for medium maturity gilts, and 24 July for long maturity gilts.

In line with the Bank’s previous consolidated APF gilt sales Market Notice from September 2022, which aimed to reduce the stock of purchased gilts by £80 billion over twelve months, the Bank will sell £7.11 billion worth of gilts in Q3. This will enable the Bank to achieve the £80 billion target set by the Monetary Policy Committee (MPC), based on the current market value of APF gilt holdings.

The Bank will distribute the gilt sales evenly across short, medium, and long maturity buckets, defined as gilts with residual maturities of 3-7 years (short), 7-20 years (medium), and over 20 years (long).

In Q3 2023, the Bank plans to hold three gilt sale auctions in each of these sectors, with each auction having a planned size of £790 million. The specific dates for each auction are specified in the Market Notice. It is worth noting that in this quarter, the Bank will adjust its auction frequency to once per calendar month, as opposed to once per fortnight, based on the remaining sales proceeds needed to meet the MPC’s target.

As this quarter represents the final period of the £80 billion target set in September 2022, the Bank may need to make adjustments to the sales program if market movements affect the amount of gilts required to meet the target. To minimize disruption, any necessary adjustments will likely be made to the size of the final three auctions while maintaining equal sales amounts across the three maturity buckets. The Bank will provide advance notice to the market regarding any adjustments.

Apart from the changes specified in this Market Notice, the operational parameters and participation requirements outlined in previous notices will continue to apply to these gilt sales.

The Bank will monitor the market impact of its gilt sales program and retains the discretion to amend the schedule, including the gilts to be sold, auction sizes, or any other aspect of its approach.

The Bank plans to communicate future sales schedules for Q4 2023 and beyond after the MPC’s annual review of the reduction in purchased gilt stocks, which is expected to be announced alongside the MPC meeting on 21 September 2023.

Table: APF gilt sales auction calendar – July to September 2023

Media contacts:

press@bankofengland.co.uk
020 3461 4411

SOURCE: BANK OF ENGLAND