Michele Bullock: Review of the Bond Purchase Program

Thank you for the opportunity to talk with you today.

I am going to use my time to talk about two issues: the review of our bond purchase program (BPP) during the pandemic; and the Bank’s financial statements for 2021/22. The two issues are related because, while the bond purchase program was a policy response to extraordinary economic circumstances, it has had big implications for the Bank’s balance sheet, profits and capital.

I will give you the punch lines up front. In terms of the BPP, the review concludes that it broadly achieved its aims. But one result of the change in the Bank’s balance sheet is that the Bank will report a substantial accounting loss in its 2021/22 annual accounts and, as a consequence, negative equity. This will not, however, affect the Bank’s ability to operate effectively or perform its policy functions. And over the next few years the Bank will return to positive earnings and to positive equity.