see bank of england monetary policy report august 2021 pp. 12 - 13 2. see monetary policy summary and minutes of the mpc meeting - august 2022 3. there is a growing body of work assessing the economic impact of qe, to which the bank has contributed. for a recent summary of qe at the bank of england, see qe at the bank of england : a perspective on its functioning and effectiveness | bank of england. the bank ’ s approach to qe has also be assessed in detail by the bank ’ s independent evaluation office : ieo evaluation of the bank of england ’ s approach to quantitative easing | bank of england. mpc members have contributed through speeches – broadbent ( 2018, 2023 ), ramsden ( 2021 ), tenreyro ( 2023 ). 4. global central banks also used other tools including the funding for lending scheme and term funding scheme in the uk and the ecb tltro. 5. the bank ’ s balance sheet is in practice even larger because of the size of drawings under the tfsme, which peaked at £193bn in december 2021. 6. asset purchases involve large flows of cash during the lifetime of the portfolio because of factors such as income from coupon payments on the bonds held and interest paid on the loan used to fund them. 7. see chart 3 in asset purchase facility quarterly report - 2023 q1 and box 4. 1 in obr report on fiscal risks and sustainability - july 2023 8. see bank of england monetary policy report august 2021 pp. 12 - 13 9. for further discussion, see bailey et al ( 2020 ) : the central bank balance sheet as a policy tool : past, present and future. 10. see asset purchase facility : corporate bond purchase scheme sales programme – market notice 5 may 2022 | bank of england 11. see thirteen days in october : how central bank balance sheets can support monetary and financial stability − speech by andrew hauser ( bankofengland. co. uk ) 12. thirteen days in october : how central bank balance sheets can support monetary and financial stability − speech by andrew hauser ( bankofengland. co. uk ) pp. 13 - 14 13. see exchange of letters between the governor and the chancellor on the asset purchase facility - february 2022 | bank of england 14. see asset purchase facility : gilt sales – provisional market notice 4 august 2022 | bank of england 15. explanatory

##c ’ s £80 billion target, based on the market value of apf gilt holdings. overall, the evidence to date supports our expectation that qt effects on gilt yields, while greater than zero, appear to be materially smaller than the effects of qe. given our experience so far, as a very rough indication of scale, bank staff estimate that a one - off additional £80 billion of qt relative to expectations is likely to increase 10 year gilt yields by less than 10 bps in prevailing market conditions. based on our experience of qe, that would map across into an impact on activity and inflation of less than 0. 2 % and 0. 1pp respectively. these small numbers are welcome. the mpc ’ s key principles have been designed exactly to support a relatively small economic impact from qt, such that it can proceed as a process in the background. importantly, to the extent any qt impacts – while relatively small – are coming through, the mpc will have observed the associated effects on asset prices, conditioned its forecasts accordingly and has full flexibility to adjust its active tool – bank rate – to the extent that any offsetting action is deemed necessary. given the limited evidence for qt impact to date, particularly in the context of the other large shocks to the economic outlook, from my perspective qt has not had a bearing in determining my votes on bank rate since the qt programme commenced. qt operations – mindful of market function bank staff are constantly monitoring market liquidity and functioning, drawing on a combination of market intelligence and data analytics. [ 18 ] dedicated market intelligence teams speak to a broad set of market participants about conditions in the gilt market and broader uk - relevant financial markets. we combine this with a wide range of quantitative indicators on market liquidity, including indicators based on transaction - level data. as already stressed, the bank ’ s qt operations are designed to operate in the background. based on our experience to date and in line with the second of the mpc ’ s key principles, we have found no evidence that our operations have themselves disrupted market functioning. first, some context. as already flagged and covered in detail elsewhere, market conditions deteriorated rapidly in late september 2022. [ 19 ] metrics of gilt market illiquidity spiked, reaching similar levels to the 2020 ‘ dash for cash ’ ( chart 5 ). ( a ) this is a composite measure, calculated by the bank of