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Mark Carney urges Britons to be 'prudent' after Brexit vote - business live | |
(35 minutes later) | |
12.08pm BST | |
12:08 | |
Carney: We'll work with Brexiters | |
Last question goes to my colleague Nils Pratley. | |
He asks Mark Carney about the criticism piled on the Bank from Leave campaigners such as Andrea Leadsom (now in the running to become prime minister). | |
Carney replies that “we’re not asking people to make our lives easier” | |
This is a technocratic institution. We’ll work with whoever is in government. | |
In short, the Bank will keep sticking to its remit, publishing the reports expected under its remit. And that includes flagging up threats to the UK economy. | |
Carney on conflicts with MPs: We're not asking people to make our lives easier...it's our job to call it as we see it | |
That’s the end of the press conference. | |
12.02pm BST | |
12:02 | |
Q: Could the Bank of England really ease monetary policy much lower - some economists suggest new quantitative easing (buying bonds with new money) wouldn’t have much impact? | |
Carney declines to comment on monetary policy – as today’s meeting is about financial stability. | |
I think Carney should get some brightly coloured hats, so ppl know when he has his FPC vs MPC hat on. ie stop asking about interest rates! | |
12.00pm BST | |
12:00 | |
Q: Is the Bank of England worried about the prospect of Scotland breaking away from the UK? | |
That’s a double hypothetical, Carney says - there’s no 2nd referendum yet, let alone a decision. | |
Carney says Scotland vote is hypothetical; there's no planned referendum, and we don't know regulatory environment that would be applicable | |
11.58am BST | |
11:58 | |
Back to the Bank of England press conference: | |
Q: What discussions have you had with other central banks about the referendum? | |
We have had close contact with them, Carney replies, especially in the run-up to the vote. This was effective in building mutual understanding of the risks posed by Brexit, he says. | |
He points to the ‘currency swaps’ which allows central banks to share dollars, euros, pounds, yen etc with each other. | |
And the global economy faces ‘notable’ spillovers, he adds. | |
11.53am BST | 11.53am BST |
11:53 | 11:53 |
Government meeting with major banks about Brexit risks today | Government meeting with major banks about Brexit risks today |
UK chancellor George Osborne has welcomed the BoE’s decision to ease bank capital rules. | UK chancellor George Osborne has welcomed the BoE’s decision to ease bank capital rules. |
Important move by @bankofengland using tools I gave them to reduce banks' capital requirements to boost lending capacity by up to £150bn | Important move by @bankofengland using tools I gave them to reduce banks' capital requirements to boost lending capacity by up to £150bn |
He also reveals that major bank bosses are heading to his offices this morning, to discuss the crisis | He also reveals that major bank bosses are heading to his offices this morning, to discuss the crisis |
Meeting major banks in Downing Street shortly to discuss response to referendum result. We need great national effort to steer UK through | Meeting major banks in Downing Street shortly to discuss response to referendum result. We need great national effort to steer UK through |
11.51am BST | 11.51am BST |
11:51 | 11:51 |
The decision to cut the counter-cyclical capital buffers is one of several Brexit u-turns, tweets The Sun’s political editor: | The decision to cut the counter-cyclical capital buffers is one of several Brexit u-turns, tweets The Sun’s political editor: |
So; banks' capital reserves to be spent, deficit to go back up, AAA credit rating lost. Six years of economics reversed in 12 days #Brexit | So; banks' capital reserves to be spent, deficit to go back up, AAA credit rating lost. Six years of economics reversed in 12 days #Brexit |
Hang on, though, didn’t The Sun back Brexit??!! | Hang on, though, didn’t The Sun back Brexit??!! |
Updated | Updated |
at 11.52am BST | at 11.52am BST |
11.48am BST | 11.48am BST |
11:48 | 11:48 |
Structure of property investment funds may need to be reconsidered following Standard Life suspension says FCA head Andrew Bailey | Structure of property investment funds may need to be reconsidered following Standard Life suspension says FCA head Andrew Bailey |
11.43am BST | 11.43am BST |
11:43 | 11:43 |
Some key points from Mark Carney’s briefing: | Some key points from Mark Carney’s briefing: |
Carney quite rightly focussing on liquidity support to underline confidence. Correctly anticipating further pressure | Carney quite rightly focussing on liquidity support to underline confidence. Correctly anticipating further pressure |
Carney says 2014 stress tests shows banks are resilient: system is there for anyone who wants to buy a house | Carney says 2014 stress tests shows banks are resilient: system is there for anyone who wants to buy a house |
Carney advises consumers to be prudent post Brexit - just as he would if the UK was in the 10th year of a boom | Carney advises consumers to be prudent post Brexit - just as he would if the UK was in the 10th year of a boom |
#Carney: the law is the law, the rules are the rules, the system is the system. ie keep on keepin' on. | #Carney: the law is the law, the rules are the rules, the system is the system. ie keep on keepin' on. |
11.41am BST | 11.41am BST |
11:41 | 11:41 |
Q: Does the Bank of England actually have the capacity to handle Britain’s exit from the EU? | Q: Does the Bank of England actually have the capacity to handle Britain’s exit from the EU? |
Mark Carney insists that yes, the BoE has the staff capacity to cope once Article 50 is triggered. | Mark Carney insists that yes, the BoE has the staff capacity to cope once Article 50 is triggered. |
But until that actually happens, the financial rules do not change. | But until that actually happens, the financial rules do not change. |
11.39am BST | 11.39am BST |
11:39 | 11:39 |
City watchdog in 'very close touch' with real estate firms | City watchdog in 'very close touch' with real estate firms |
Q: How worried is the Bank about Standard Life’s decision to lock down its property fund last night? (to prevent investors bailing out) | Q: How worried is the Bank about Standard Life’s decision to lock down its property fund last night? (to prevent investors bailing out) |
Andrew Bailey, the next head of the FCA (the city watchdog), says Standard Life has taken a ‘sensible move’ to suspend redemptions. | Andrew Bailey, the next head of the FCA (the city watchdog), says Standard Life has taken a ‘sensible move’ to suspend redemptions. |
It prevents a stampede of money out of property funds while the underlying assets are revalued (which can take time). It would be wrong for investors at the front of the queue to get their money back, while those at the back lose out, Bailey says. | It prevents a stampede of money out of property funds while the underlying assets are revalued (which can take time). It would be wrong for investors at the front of the queue to get their money back, while those at the back lose out, Bailey says. |
The FCA is also in “very close touch” with firms in the sector, he reveals. | The FCA is also in “very close touch” with firms in the sector, he reveals. |
Related: Standard Life shuts property fund amid rush of Brexit withdrawals | Related: Standard Life shuts property fund amid rush of Brexit withdrawals |
11.36am BST | 11.36am BST |
11:36 | 11:36 |
Q: How low could the Bank of England cut interest rates (they’re currently 0.5%)? | Q: How low could the Bank of England cut interest rates (they’re currently 0.5%)? |
Carney declines to speculate much, as the Monetary Policy Committee is due to take a decision next week. | Carney declines to speculate much, as the Monetary Policy Committee is due to take a decision next week. |
Any measure to stimulate the economy must be well-aimed and focus on the domestic economy. | Any measure to stimulate the economy must be well-aimed and focus on the domestic economy. |
We must also consider ‘unintended consequences’, he adds. [ultra-low interest rates make it hard for banks to achieve profitability, for example] | We must also consider ‘unintended consequences’, he adds. [ultra-low interest rates make it hard for banks to achieve profitability, for example] |
11.34am BST | 11.34am BST |
11:34 | 11:34 |
Q: What impact will the slump in the pound have on the UK economy? | Q: What impact will the slump in the pound have on the UK economy? |
Mark Carney says that it should help with Britain’s current account deficit (reminder, it’s worryingly high) | Mark Carney says that it should help with Britain’s current account deficit (reminder, it’s worryingly high) |
Updated | Updated |
at 11.34am BST | at 11.34am BST |
11.32am BST | 11.32am BST |
11:32 | 11:32 |
Carney's message to Britain: Be prudent | Carney's message to Britain: Be prudent |
Q: What is your advice to people who are wondering about taking out a loan or mortgage? | Q: What is your advice to people who are wondering about taking out a loan or mortgage? |
We are advising people to be prudent, governor Carney smiles. | We are advising people to be prudent, governor Carney smiles. |
If you are taking out a mortgage, at some stage, during the life of that mortgage, conditions will be difficult. | If you are taking out a mortgage, at some stage, during the life of that mortgage, conditions will be difficult. |
So you want to be sure, as a household or an individual, that you can repay that mortgage - you don’t want to lose your house or flat. | So you want to be sure, as a household or an individual, that you can repay that mortgage - you don’t want to lose your house or flat. |
But this is classic central bank advice, he adds. We’d tell you to be prudent if we were in the 10th year of a boom. | But this is classic central bank advice, he adds. We’d tell you to be prudent if we were in the 10th year of a boom. |
11.29am BST | 11.29am BST |
11:29 | 11:29 |
Carney says the Bank wants to avoid a repeat of the 2007-2008 conditions, when it was out of question to seek credit. | Carney says the Bank wants to avoid a repeat of the 2007-2008 conditions, when it was out of question to seek credit. |
Banks can be part of the solution not the problem says Mark Carney as banks have more capital than they need | Banks can be part of the solution not the problem says Mark Carney as banks have more capital than they need |
11.28am BST | 11.28am BST |
11:28 | 11:28 |
Q: Do you regret allowing banks to pay dividends in the run-up to June’s referendum? | Q: Do you regret allowing banks to pay dividends in the run-up to June’s referendum? |
Mark Carney insists that UK banks are financially stable. | Mark Carney insists that UK banks are financially stable. |
Q: How many UK households are vulnerable to an economic slowdown? | Q: How many UK households are vulnerable to an economic slowdown? |
Carney flips this question to deputy governor Jon Cunliffe. | Carney flips this question to deputy governor Jon Cunliffe. |
Cunliffe says the Bank are watching the ‘cohort’ of vulnerable households closely. | Cunliffe says the Bank are watching the ‘cohort’ of vulnerable households closely. |
Households who are highly indebted tend to cut their consumption drastically, when hit by an interest rate shock or earnings shock, Cunliffe says. | Households who are highly indebted tend to cut their consumption drastically, when hit by an interest rate shock or earnings shock, Cunliffe says. |
But the Bank did restrict the availability of high loan-to-value mortgages in 2014, to limit the number of highly vulnerable households, he adds. | But the Bank did restrict the availability of high loan-to-value mortgages in 2014, to limit the number of highly vulnerable households, he adds. |
11.23am BST | 11.23am BST |
11:23 | 11:23 |
Q: Is the Bank worried about a crash in the buy-to-let market? | Q: Is the Bank worried about a crash in the buy-to-let market? |
Carney says the Bank is watching the buy-to-let sector carefully. | Carney says the Bank is watching the buy-to-let sector carefully. |
He points out that the bank included a housing crash in its latest Stress Tests -- and the current environment is not a serious as modelled in those tests. | He points out that the bank included a housing crash in its latest Stress Tests -- and the current environment is not a serious as modelled in those tests. |
The core of the UK financial system is very strong, and it will be there for home-buyers and businesses, he insists. | The core of the UK financial system is very strong, and it will be there for home-buyers and businesses, he insists. |
11.19am BST | 11.19am BST |
11:19 | 11:19 |
Carney: UK more risk averse after Brexit vote | Carney: UK more risk averse after Brexit vote |
Q: Is the Bank seeing signs of a slowdown in credit demand? | 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. | 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. | 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. | But demand for credit will be governed by the level of uncertainty over Britain’s future, and its relationship with the EU. |
UK is in a much more risk adverse environment says Carney | UK is in a much more risk adverse environment says Carney |
Updated | Updated |
at 11.24am BST | at 11.24am BST |
11.17am BST | 11.17am BST |
11:17 | 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? | 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. | 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. | And it is probably experiencing a “material slowing”, despite the foreign exchange moves. |