MNI ANALYSIS:BOE September APF Decision: What you need to know

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• We think that the market is looking at the wrong measure of reserves when discussing the BOE’s September APF decision: we think that supply-led reserves are much more important than total reserves.
• Supply-led reserves will fall below the top of the preferred minimum range of reserves (PMRR) when taking into account QT for the current period (to Sep25) and TFSME repayments (to Oct 25).
• Even with just passive QT from Oct25-Sep26, supply-led reserves will fall to the middle of the PMRR range.
• We outline the fiscal costs of QT (which are huge).
• At present we think the best decision for QT in the year ahead would be to continue active sales at broadly the same pace as in the current year.
• We also set out in our appendices the main components of the Bank’s balance sheet and how the repo operations work