First, we have less of a handle on their impact than we do changes in short-term policy rates and, as I just indicated, that impact may well be less when markets are functioning normally. Second, if the central bank routinely deals in large quantities of government debt, it may find itself more open to pressure from the fiscal authorities, while market participants are more likely to fear that the debt will be permanently monetised. That brings me naturally to the topic of unwinding our present large stock of asset purchases. We have committed to maintaining the stock, including reinvesting the cash flows associated with maturing gilts, at least until the first rise in Bank Rate. But at some stage thereafter, as part of the transition back to normality, we expect to start running down the portfolio and withdrawing the associated bank reserves. In principle, we could do this just by letting the gilts mature. However, as Chart 5 demonstrates, it would take a long time to run off organically in its entirety because of the relatively long average maturity of the gilts held: the weighted average maturity of the portfolio is more than 12 years. So more active sales may be called for at some stage,  2  For the United Kingdom, see: Michael Joyce, Matthew Tong and Robert Woods (2011), “The United Kingdom’s Quantitative Easing Policy: Design, Operation and Impact”, Bank of England Quarterly Bulletin, 51(3), pp.200–212.
Our central view is that the margin of slack is presently around 1–1½% of GDP, though I should stress the considerable degree of uncertainty around that estimate. I should also stress that this is a short-run concept, relevant to inflationary pressures a year or so ahead, and does not incorporate any endogenous improvement in productivity that may materialise in the wake of faster growth over a rather longer horizon. We have said that we are aiming to  2  BIS central bankers’ speeches  close this gap over the next two or three years, while keeping inflation at around our 2% target. We have also said that when Bank Rate does rise, it is likely to do so only gradually and to a level that is likely to remain materially below its pre-crisis average of 5% for some while. That reflects: the continuing headwinds from public and private de-leveraging and continued weak growth in the euro area; continued downward pressure on global interest rates from high Chinese net savings; and the undue compression of risk premia during the run-up to the crisis. Let me now turn to asset purchases, our preferred tool for adding stimulus when Bank Rate reached its effective lower bound. Under this programme, the Bank acquired £ billion of longer-term UK government debt – equivalent to around 25% of annual GDP – comprising £ billion purchased between March 2009 and February 2010 and another £ billion acquired between October 2011 and November 2012.