As set out in the minutes of the MPC meeting ending on 29 January 2020, the MPC has agreed to make £17.5bn of gilt purchases, financed by central bank reserves, to reinvest the cash flows associated with the maturity on 7 March 2020 of a gilt owned by the Asset Purchase Facility (APF).
Operations to make these gilt purchases will commence in the week beginning 9 March 2020. 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; those with a residual maturity of over 15 years will be purchased on Tuesdays; and those with a residual maturity of 7-15 years will be purchased on Wednesdays.
The Bank does not intend to hold a gilt purchase operation on 11 March 2020 as that date coincides with the Chancellor delivering a Budget. This operation will instead be held on Wednesday 8 April 2020.
The Bank intends to purchase evenly across the three gilt maturity sectors. The size of auctions will initially be £1,456mn for each maturity sector.
The Bank will confirm details of the following week’s operations each Thursday at 16.00 (London time). 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.
Other than as amended by this Market Notice, previous Market Notices relating to the Bank’s gilt purchases under the APF will apply1.