BOE: Changes to money market tools including ILTR

The BOE has released two statements on the BOE's money market tools ILTR (PRA statement here) and a discussion paper on the transition to a repo-led operating framework (available here). As part of this, the Bank has opened a consultation - with a deadline for feedback of 31 January 2025.

• From Q2 (proposed date) the reserves available in each auction ILTR will increase from GBP25bln to GBP30bln. The Bank notes that this would mean an increase in the maximum ILTR stock available to GBP720bln.
• "The Bank will improve predictability of allocation for SMF participants during the early stages of transition by increasing the quantity supplied at minimum spreads by 40%–100%, to £7 billion–£10 billion per auction. This is up from £5 billion today. This would increase the stock of reserves available at minimum spreads from £120 billion today to £168 billion–£240 billion."
• "The Bank is still reviewing how the total quantity of reserves supplied in the ILTR is allocated to different collateral sets."
• "Further changes to the ILTR to ensure it is appropriately calibrated to supply a larger stock of reserves for the transition to a repo-led framework will take effect in 2025. Further details on these changes will be announced by the Bank in due course once responses to the Discussion Paper have been taken into consideration."
• Note that Deputy Governor Ramsden is speaking at 13:00GMT today on the BOE's toolkit - so he is likely to elaborate on today's announcements.
• There should be no immediate market impact from these operations - but they increase the Bank's role in a demand-led framework going forward and should help to cushion any small liquidity bumps in the market.