Bank of England's response
In response, a spokesperson for the Bank of England stated that the scale, pace and nature of Asset Purchase Facility unwind is chosen solely to meet the MPC’s policy objectives.
They added that, subject to those policy objectives, the bank’s operations are governed, designed and risk managed with the aim of minimising cost and risk.
The spokesperson additionally stated that asset sales are not being used as the primary tool of monetary policy.
They evidenced this by pointing to the Treasury committee meeting on September 6 2023 where Andrew Bailey was asked to what extent has the quantitative tightening the bank engaged in so far tightened monetary policy.
In response, Bailey stated: “On the basis of what we have done so far, we do not think so, to any great extent.”
The spokesperson additionally stated that asset purchases and sales should be judged on wider cost-benefits and the degree to which they help to meet the inflation target.
They also said that, between 2009 and 2022, the APF’s activities generated “positive net cash flows” from the APF to the Treasury, peaking at a cumulative £123.8bn at end-September 2022.
Furthermore, future cash flows are “uncertain and highly sensitive to the assumptions used for market interest rates and how quickly the portfolio is unwound”, they stated.
tom.dunstan@ft.com
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