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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/jul/05/mark-carney-to-outline-bank-of-englands-brexit-stability-moves-business-live
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Mark Carney eases bank lending rules to fight Brexit crisis as pound hits 31-year low - live updates | Mark Carney eases bank lending rules to fight Brexit crisis as pound hits 31-year low - live updates |
(35 minutes later) | |
11.19am BST | |
11:19 | |
Q: Is the Bank seeing signs of a slowdown in credit demand? | |
Carney says this is a crucial point -- the credit market will be driven by demand, not supply. | |
We are seeing signs that the environment is becoming more ‘risk averse’, he says. And that’s why the Bank has decided to relax credit rules, to encourage banks to lend. | |
But demand for credit will be governed by the level of uncertainty over Britain’s future, and its relationship with the EU. | |
11.17am BST | |
11:17 | |
Q: The Monetary Policy Committee warned that Britain might fall into recession after a Brexit vote, but might the fall in the pound actually be a stimulus? | |
Carney replies that there is “growing evidence” that the economy was slowing, even before the referendum. | |
And it is probably experiencing a “material slowing”, despite the foreign exchange moves. | |
11.16am BST | |
11:16 | |
11.15am BST | |
11:15 | |
Onto questions | |
Q: The FTSE 100 has recovered its early post-Brexit falls and the pound has stabilised, so aren’t markets less stressed than feared? | |
Mark Carney replies that markets are functioning “pretty well”, although sterling volatility did hit a record high. | |
He says sterling has moved in the way that was “necessary” to allow the economic adjustment that is needed. [by which he means that a cheaper pound should help exporters and cut imports, in theory.....] | |
Governor Carney adds that the FTSE 250 index gives a sense of investor expectations on the direction of the economy. | |
[The FTSE 250, which contains smaller companies, has fallen much more than the FTSE 100, and is down 2.6% today] | |
11.11am BST | |
11:11 | |
Mark Carney says there will be no immediate changes to UK financial regulations, until Britain has actually left the EU. | |
The law is the law, and the rules are the rules. | |
He is pledging to take whatever action is needed ensure monetary stability, and support the real economy. | |
But the Bank can only do so much..... | |
Carney: BOE "cannot fully offset the economic and market volatility." #Brexit | |
Mark Carney: 'we have a plan, we are putting the main parts in operation and it is working' | |
11.09am BST | |
11:09 | |
Mark Carney confirms that the Bank of England has decided to cut the ‘counter-cyclical capital buffer’ on UK banks. | |
This means banks need to keep less capital on their books, and can pump up to £150bn more into the economy. | |
This will “immediately” give banks greater flexibility to lend to UK businesses and households, declares the BoE governor. | |
He adds: | |
Those businesses and households who want to seize viable opportunities in the post-Brexit world can be confident that they will be supported by the financial sector. | |
Carney also declares that regulators will make sure that banks don’t use this flexibility to boost bonus payments, or dividends. | |
11.06am BST | |
11:06 | |
Mark Carney begins his press conference by reminding us that the Bank identified the referendum as the biggest threat to the UK economy. | |
That warning is now being borne out, the governor says, pointing to the plunge in the pound since June 23rd. | |
He singles out UK’s current account deficit (as mentioned a few minutes ago). | |
There is growing evidence that the referendum has delayed major investment decisions, Carney adds. | |
But on the upside, financial markets have responded well to the volatility after the referendum result, rather than adding to stress. | |
And banks are much better capitalised than before the Lehman crisis. | |
11.02am BST | |
11:02 | |
Mark Carney's press conference begins | |
The Financial Stability Report press conference is beginning now. We’ve added a live feed to the top of this blog - you might need to refresh to see it. | |
Alternatively, It’s also being livestreamed here (right-click to open in a new tab). | |
10.56am BST | |
10:56 | |
You can see the report yourself, here: | |
Financial Stability Report, July 2016 | |
10.56am BST | |
10:56 | |
More snap reaction: | |
Basic message from @bankofengland: financial system was facing growing problems before Brexit. They haven’t gone away & now we’ve got others | |
Bank of England post Brexit reality check: - sterling down 9%, £/$ most volatile since BW, UK banks lost 20% value pic.twitter.com/Djgpfivv3S | |
10.52am BST | |
10:52 | |
The Bank of England is also concerned about the United Kingdom’s large current account deficit, following the Brexit vote. | |
This deficit, between what Britain imports and exports, is “high by historical and international standards”, says the Bank. | |
Indeed.... --> | |
The Bank is worried that the flow of capital into the UK could now slow, making this deficit even bigger.... | |
The financing of the deficit is reliant on continuing material inflows of portfolio and foreign direct investment, which have been used to finance the public sector deficit and corporate investment, including in commercial real estate. | |
A sudden shift in the supply of foreign capital and in the current account deficit would be associated with a sharp increase in risk premia and adjustment in sterling. | |
The BoE also points out the pound suffered a record fall after the referendum vote: | |
. | |
10.45am BST | |
10:45 | |
The Bank of England has also warned Britain’s banks not to splurge cash on payments to shareholders, or bonuses to staff: | |
Bank of England's FPC says banks should "not increase dividends and otherdistributions" - not that bonuses were going up in this climate. |