Analysing the Costs of Quantitative Easing

William Allen

National Institute of Economic and Social Research (NIESR) Topical Briefings, 2025, issue 17

Abstract: The quantitative easing (QE) operations undertaken by the Bank of England between March 2009 and December 2021 in pursuit of the inflation target involved the purchase of £875 billion of gilts, valued at purchase cost. Since March 2022, the Bank has reversed some of the purchases, either by not replacing gilts that have matured, or by selling gilts from its portfolio. The purchases were financed by a loan from the Bank of England to the Asset Purchase Facility (APF), the Bank of England subsidiary inwhich the gilts are held. The APF is indemnified against losses by the Treasury; by the same token, the Treasury gets the benefit of any profits. The loan bears interest at Bank rate. The amount outstanding is now down from £875 billion to £653 billion.

Date: 2025-01
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