THE BANK BOUGHT £488 BILLION OF ITS GOVERNMENT’S DEBT — IT WILL SELL £146 BILLION OF IT — AND IT IS ASKING THE GOVERNMENT TO BE THE BUYER

The Bank of England held Bank Rate at 3.75 percent. The vote was six to three. Three members wanted 4 percent, which is exactly where the Federal Reserve went the same afternoon.

UK inflation was 3.1 percent in August, more than a point above target, which forces the Governor to write the Chancellor a letter explaining himself. Of the 1.1 point overshoot, 0.7 is energy, mostly motor fuels. Brent was $106 a barrel on September 14, up 36 percent since July. The October energy cap goes to £1,723.

That is the news. Here is the filing.

The same meeting voted unanimously to take the Bank’s gilt holdings to zero. The pile is £488.2 billion. The market notice shows how much of it ever meets a buyer.

£221.7 billion matures before 2035 and is simply held. Another £120 billion of the longest bonds is held to maturity “to indirectly back banknote issuance,” which means the note in your pocket is backed by government debt the Bank bought with money it made.

That leaves £146.5 billion to actually sell, at £20 billion a year until 2034.

And the Bank is talking to the Treasury about who buys it. Under the model it is reviewing, “HMT would instruct the DMO to purchase the APF gilts that the Bank Executive is selling.”

The government would buy back the debt the Bank made money to buy. Open auctions are paused while they work it out.