Taxpayers face £8bn bill from QE, admits Bank It used market assumptions that interest rates would rise in early 2016 from their historic low of 0.5pc to 4pc by 2020, and that the asset sales would start in September of that year. Having previously estimated that just £200bn of QE had depressed gilt yields by one percentage point, the Bank assumed yields would rise by two percentage points relative to base rate once the larger programme started to be unwound. Selling at £25bn a quarter, the Bank would have completely exited QE by 2020. Under that central scenario, the cash built up through interest payments on the gilts would total £67bn - more than offsetting the £50bn of losses made when the gilts were sold. However, if yields rose by four percentage points above base rate, the losses made on the sale of the gilts would rise to £75bn, producing a net loss of £8bn to the public finances in 2020. The Bank said the outcome could be worse as other factors may be at work "such as stresses in financial markets [that] could also reduce the market value of the [QE] portfolio." Under a highly optimistic scenario that assumed no effect on gilt yields, the programme would end up £51bn in profit. Just altering the single assumption about the reaction of gilt yields to the announcement of asset sales can cause large changes in the results. But it is very difficult to judge which of these outcomes is most likely," the Bank said. It added that the scheme's profit or loss "should not be used as a measure of the success of asset purchases, or of the impact of the scheme on the public sector accounts as a whole." The scheme should instead be judged by the degree to which it meets its aims - to improve corporate credit conditions and boost nominal spending in order to meet the inflation target in the medium term.