The Bank has on 12 January completed its sales of the £19.3bn portfolio of temporary holdings of UK government bonds purchased in Autumn 2022 on financial stability grounds. Between 28 September and 14 October, the Bank of England, in line with its financial stability objective, conducted temporary and targeted purchases of index-linked and long-dated conventional UK government bonds (gilts). In total, the Bank purchased £19.3bn of gilts, of which £12.1bn were long-dated conventional gilts and £7.2bn were index-linked gilts. The Bank has now fully sold its £19.3bn portfolio of temporary gilt holdings. This follows yesterday’s reverse enquiry window, and the subsequent bilateral sale of small remaining holdings.
The purchases were made to restore orderly market conditions following dysfunction in the UK gilt market, and in doing so reduce risks from contagion to credit conditions for UK households and businesses.
To ensure the Bank delivered on its commitment that the purchases would be temporary in nature, the Bank began unwinding these purchases on 29 November. The gilts in this portfolio were made available to interested buyers via reverse enquiry windows. This approach helped ensure that the unwind was responsive to market demand and did not trigger renewed dysfunction.
The Financial Policy Committee has welcomed the Bank’s timely but orderly unwind of this portfolio.
The Monetary Policy Committee (MPC) has been informed, in line with the Concordat governing MPC’s engagement with the Bank Executive regarding balance sheet operations.
Source: Bank of England