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UK economy
The Asset Purchase Facility (APF) was announced on 19 January 2009 with the objective of increasing the availability of corporate credit, in order to support the Bank of England’s responsibilities for financial stability and monetary stability in the UK. At the request of the Monetary Policy Committee (MPC), the APF was expanded on 3 March 2009 to enable the MPC to use it for monetary policy purposes, financing asset purchases by the issuance of central bank reserves, in order to meet the inflation target in the medium term.
On 9 February 2012, the Government published letters exchanged between the Chancellor of the Exchequer and the Governor or the Bank of England that authorise the MPC to increase the ceiling on the scale of asset purchases through the APF financed by the issuance of central bank reserves.
On 29 November 2011, the Government published letters exchanged between the Chancellor of the Exchequer and the Governor of the Bank of England that reduce the maximum APF limit for purchases of eligible private sector assets by £40 billion to a ceiling of £10 billion, financed by the issuance of central bank reserves, Treasury Bills and the DMO’s cash management operations.
On 6 October 2011, the Government published letters exchanged between the Chancellor of the Exchequer and the Governor or the Bank of England that authorise the MPC to increase the ceiling on the scale of asset purchases through the APF financed by the issuance of central bank reserves.
Previous letters relating to the Asset Purchase Facility can be found on the National Archives website (opens in new browser window)
The remit for the Monetary Policy Committee (MPC) requires the Governor to write to the Chancellor if CPI inflation deviates from the 2 per cent target by more than one percentage point. The Governor’s letter should explain:
The remit requires a further letter after three months if inflation remains more than one percentage point above or below the target.
On 13 February 2012, the Governor wrote to the Chancellor about the CPI inflation rate for January 2012 of 3.6 per cent. The Chancellor replied on 14 February 2012.
On 14 November 2011, the Governor wrote to the Chancellor about the CPI inflation rate for October 2011 of 5.0 per cent. The Chancellor replied on 15 November 2011.
On 15 August 2011, the Governor wrote to the Chancellor about the CPI inflation rate for July 2011 of 4.4 per cent. The Chancellor replied on 16 August 2011.
On 16 May 2011, the Governor wrote to the Chancellor about the CPI inflation rate for April 2011 of 4.5 per cent. The Chancellor replied on 17 May 2011.
On 15 November 2010, the Governor wrote to the Chancellor about the CPI inflation rate for October 2010 of 3.2 per cent. The Chancellor replied on 16 November 2010.
CPI inflation in July 2010 remained above 3 per cent, prompting an open letter from the Governor to the Chancellor on 16 August 2010. The Chancellor replied to the Governor on the 17 August 2010.
On 17 May 2010, the Governor wrote to the Chancellor about CPI inflation for April 2010 being more than one percentage point above target. The Chancellor replied on 18 May 2010.
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