Bank of England sells last of £20 billion gilts bought in mini-budget crisis

The Bank of England has closed the chapter on the giant flood of money it injected into markets in the autumn in a bid to stem the bleeding from the former prime minister’s mini-budget.

Officials on Threadneedle Street said on Thursday they have sold all of the nearly £20 billion of gilts they snapped up during the crisis in September and October.

The Bank is believed to have sold the gilts for in the region of £23.1 billion.

“The Bank has now fully sold its £19.3 billion portfolio of temporary gilt holdings” after a small sale on Wednesday, the Bank said.

It added: “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.”

After the mini-budget, the Bank stepped in to mop up some of the mess left by then-chancellor Kwasi Kwarteng and then-PM Liz Truss.

The two announced a raft of measures on September 23 which spooked markets and caused gilt yields – the interest the Government pays on its loans – to soar.

Through a series of links, it put many of the UK’s biggest pension funds at risk and created a cycle where they tried to sell their gilts, which pushed yields up further.

The Bank’s purchases were designed to buy time for the pension funds to sell other investments instead.

It made the purchases between September 28 and October 14, snapping up £12.1 billion of long-dated conventional gilts and £7.2 billion of index-linked gilts.

But it was only meant to be a short-term measure.

By the end of November the Bank felt institutional investors were stable enough for it to start withdrawing and unloading its gilts back into the market.

It made the final sale, of the £19.3 billion portfolio, on Wednesday.

“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,” a Bank spokesman said.

“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.”