Bank of England cuts gilt holdings by £32.5bn in second quarter
The APF was introduced in 2009 as part of its quantitative easing strategy during the global financial crisis, and expanded significantly during the COVID-19 pandemic. Gilts held under the facility peaked at around £875bn in 2022 before the MPC shifted toward reducing the balance sheet.
According to the latest quarterly report published on Tuesday, a total reduction of £32.5bn in gilt holdings was recorded from April to June 2025. Re
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This includes £2.9bn from outright sales and a further £29.6bn from maturing gilts. As a result, the total stock of gilts held for monetary policy purposes stood at £590bn as of 30 June, down from £622.5bn at the end of the first quarter.
Threadneedle Street held three gilt sale operations during April alone, and has already published the schedule for third-quarter gilt sales on 20 June, to continue to reduce its balance sheet.
The report included updated projections of future APF cash flows under a range of scenarios. The estimates remain highly sensitive to future bank rate paths and the pace of gilt unwind.
Assuming the current £100bn annual pace, the net present value of cumulative cash flows is estimated at around -£115bn, the report said.
It comes as the BoE cut interest rates to 4% last week, the fifth cut in a year, as the UK economy struggles amid high inflation and a stagnant jobs market.
The 25 basis point reduction is expected to ease pressure on mortgage holders and homebuyers, potentially unlocking more affordable borrowing options.
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This move brings borrowing costs back to levels not seen since March 2023, the lowest in two years.
The MPC voted by a majority of 5–4 to reduce the bank rate by 0.25 percentage points, to 4%, rather than maintaining it at 4.25%.
Andrew Bailey, BoE governor, said on Thursday: 'We've cut interest rates today, but it was a finely balanced decision. Interest rates are still on a downward path, but any future rate cuts will need to be made gradually and carefully.'
The unprecedented split saw governor Bailey force the monetary policy committee to vote twice after a deadlocked initial vote. It was the first time in MPC history that the committee had to hold two rate votes.
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