APF indemnity could raise raise gilt sales by greater amount than the “Growth Plan”

• The MNI Markets team calculates that through the first year of active gilt sales the Treasury will have to transfer GBP37bln to the BOE’s APF due to the indemnity (without any policy changes).
• These costs could exceed the costs of the entirety of the government’s “Growth Plan” (excluding the energy price cap).
• Any transfers to/from the APF to Treasury directly impact CGNCR – to date this has been helping keep borrowing lower, but this is about to reverse significantly.
• This may lead the Bank of England to reconsider the parameters for its active gilt sales programme or the interest rate paid on excess reserves at the central bank.