BOE FPC says banking system could continue to support economy through disorderly Brexit

Author: Mike Paterson | Category: Central Banks

BOE FPC report now out 16 March

That's it Old Lady, get those rates hiked a little so you have some cutting room when the proverbial hits the fan.

  • Brexit risks do not warrant additional capital buffers for banks
Who needs them when they've been stuffing their face on cheap money for so long?

  • Counter Cyclical Capital Buffer unchanged At 1%

  • UK banks facing tougher hurdles In 2018 stress test

  • Domestic risk appetite has risen since November

  • To revisit CCYB level in June

  • Doesn't see cryptocurrencies as a threat to financial stability

  • UK current account increasingly funded by capital inflows, this increases reliance on confidence of foreign investors

Says the FPC:

While the outlook for global growth has strengthened further, there are material risks associated with interest rate volatility.  The principle risks are in debt markets.  Across major markets, spreads between corporate and sovereign bond yields remain compressed, particularly for high-yield corporate bonds.  

Against that market backdrop, risks stemming from corporate debt in the United States have continued to build.  Financial vulnerabilities in China remain elevated.  

Full report here and results of 2018 Stress Test here

Ntg to faze markets understandably. GBPUSD 1.3970 but EURGBP back up to 0.8826 from 0.8816 as EURUSD nudges higher and takes out 1.2330 sell interest. Option interest at 1.2300 and 1.2350 in play

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