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Version 5 Version 6
MPs quiz Mark Carney on Brexit fallout - business live MPs quiz Mark Carney on Brexit fallout - business live
(35 minutes later)
11.46am BST
11:46
Carney: we have tools to meet stability
Carney is talking about the ultra low rates environment we are currently in. The governor suggests that the Bank still has tools up its sleeve should it need them.
We have the tools to meet our responsibilities for both monetary and financial stability.
Carney continues to sound the same reassuring note he has adopted since the Brexit result was known on 24 June.
Economists believe the Bank’s Monetary Policy Committee will announce fresh measures to stimulate the UK economy - possibly as early as Thursday when it announces its monthly policy decision.
The MPC could further cut interest rates (from 0.5%) or extend quantitative easing (from £375bn), or both.
11.36am BST
11:36
FPC member Donald Kohn says the most likely scenario of a rise in UK interest rates is a strong economy. “It doesn’t necessarily have to be all bad news.”
11.31am BST
11:31
Sir Jon Cunliffe, the Bank’s deputy governor for financial stability, says we have seen the beginning of financial markets putting a risk premium on UK assets.
However, his FPC colleague Donald Kohn says this is limited, because the banks are better capitalised than they were in the run-up to the financial crisis.
11.22am BST
11:22
Carney says consumers are in a better position than they were in the run-up the crisis, less indebted.
So households indebtedness now poses a smaller risk to financial stability.
Updated
at 11.36am BST
11.18am BST
11:18
Labour’s Mann asks the governor how the Bank might deal with the short term risks posed by a potential second referendum on Scottish independence.
He says the issue of UK bank headquarters should be addressed well before any future decision on independence.
Updated
at 11.36am BST
11.15am BST
11:15
Now to Italian banks. Carney says there is a macroeconomic risk posed by Italian banks and their bad loans and the Italian authorities are looking at it.
The UK’s exposure is “modest,” the governor says.
11.10am BST11.10am BST
11:1011:10
Labour MP John Mann is bringing Carney to task on property funds, and the fact the FPC was aware that investors were likely to withdraw large sums of money in the event of a Brexit vote.Labour MP John Mann is bringing Carney to task on property funds, and the fact the FPC was aware that investors were likely to withdraw large sums of money in the event of a Brexit vote.
Why didn’t the FPC do anything?Why didn’t the FPC do anything?
Carney says that markets have created funds with daily liquidity that invest in illiquid assets (i.e. property). He says the FCA were aware and were looking at the issue.Carney says that markets have created funds with daily liquidity that invest in illiquid assets (i.e. property). He says the FCA were aware and were looking at the issue.
11.04am BST11.04am BST
11:0411:04
Tyrie now asks Donald Kohn about a Republican party report in the US that claims the Department of Justice did not want to see legal proceedings against the HSBC because of risks to financial stability.Tyrie now asks Donald Kohn about a Republican party report in the US that claims the Department of Justice did not want to see legal proceedings against the HSBC because of risks to financial stability.
Should we be taking this seriously?Should we be taking this seriously?
Kohn says he has no specific knowledge of this situation.Kohn says he has no specific knowledge of this situation.
I wouldn’t pass judgment until I heard the other side of the story.I wouldn’t pass judgment until I heard the other side of the story.
Tyrie to Carney: “Did you discuss the matter with the chancellor? The allegation here is that UK authorities have been meddling.”Tyrie to Carney: “Did you discuss the matter with the chancellor? The allegation here is that UK authorities have been meddling.”
Carney says he was not involved in or aware of any alleged intervention on the HSBC case.Carney says he was not involved in or aware of any alleged intervention on the HSBC case.
(A reminder of the HSBC files here.)(A reminder of the HSBC files here.)
10.56am BST10.56am BST
10:5610:56
Carney: relaxing capital requirements is no silver bulletCarney: relaxing capital requirements is no silver bullet
There will be no “credit crunch”, unlike 2008/2009, according to the governor, because banks will have funds available to lend. Credit supply (lack of it) will not constrain the economy.There will be no “credit crunch”, unlike 2008/2009, according to the governor, because banks will have funds available to lend. Credit supply (lack of it) will not constrain the economy.
Reeves says she worries that the relaxing of rules on bank’s capital requirements are not going to be enough to save the economy post-Brexit.Reeves says she worries that the relaxing of rules on bank’s capital requirements are not going to be enough to save the economy post-Brexit.
Carney says it’s just one element of a bigger story:Carney says it’s just one element of a bigger story:
We would not represent this as a single silver bullet. It is part of a series of measures.We would not represent this as a single silver bullet. It is part of a series of measures.
10.46am BST10.46am BST
10:4610:46
Reeves says she is still worried about whether there will be a reduction in lending.Reeves says she is still worried about whether there will be a reduction in lending.
Carney says that demand, not credit availability, is more likely to wane.Carney says that demand, not credit availability, is more likely to wane.
We really want to make it as clear as possible to businesses and individuals that credit should be available for the right ideas, for the right transactions, be it a mortgage or a new business.We really want to make it as clear as possible to businesses and individuals that credit should be available for the right ideas, for the right transactions, be it a mortgage or a new business.
UpdatedUpdated
at 10.50am BSTat 10.50am BST
10.41am BST10.41am BST
10:4110:41
Rachel Reeves, Labour MP, says the Bank was right to warn on Brexit risks before she moves on to the issue of counter-cyclical buffers.Rachel Reeves, Labour MP, says the Bank was right to warn on Brexit risks before she moves on to the issue of counter-cyclical buffers.
Carney says that by relaxing the rules for banks he wanted to “take off the table” concerns about credit supply. “The banks are well capitalised.”Carney says that by relaxing the rules for banks he wanted to “take off the table” concerns about credit supply. “The banks are well capitalised.”
UpdatedUpdated
at 10.48am BSTat 10.48am BST
10.38am BST
10:38
Carney responds to Tyrie telling him that Boris Johnson thought he had done a "superb job: "Any port in a storm, chair." #Brexit
10.36am BST
10:36
Now Tyrie is asking whether Carney would agree to the publication of records of any discussions the governor had with Osborne on the matter, in order to ease any fears of political bias the public might have.
The governor says that he is prepared to look at how that can be done as long as it is within the public interest.
Tyrie quips that lead Brexiteer Boris Johnson has credited Carney with doing a good job since the vote.
Returning to serious mode, Carney says things are different in the current era, much more transparent.
We don’t keep things under wraps.
10.29am BST
10:29
Carney: I did not discuss a Brexit 'line' with Chancellor
The governor now has the chance to defend himself against the allegations. He describes the allegations as “extraordinary”.
The chair [of the FPC] does not guide conclusions. The views of the FPC are the views of the FPC.
What was in the March record are the views of the FPC, they are not pre-judged or pre-decided.
Tyrie asks whether the Chancellor sought from Carney guidance on the likely “lines” the Bank would take on the referendum.
Carney says he didn’t, that’s not the way it works.
Mark Carney looks as though he has just eaten a wasp at the Treasury Select Committee #BoE #GBP
Updated
at 10.31am BST
10.25am BST
10:25
David Kohn, an external member of the Bank’s Financial Policy Committee, says the committee were in agreement on Brexit risks, and that there was no pressure on policymaker to take one view or another.
We looked at the potential risks that might emerge from a leave vote. All of us agreed it was the biggest near term risk to financial stability
The statement we put out at the end of March was a consensus opinion.
10.20am BST
10:20
Tyrie says he wants to address the allegation in the run-up to the referendum that the Bank attempted to scare voters about Brexit for political motives.
Tyrie runs through the allegations, made by various politicians on the Leave side of the campaign. They claimed the governor was working in the interests of David Cameron and George Osborne, calling into question the independence of the Bank of England.
Tyrie:
That’s a very serious allegation.
10.16am BST
10:16
Andrew Tyrie, chairman of the Treasury Committee, makes the point that this is a significant moment, as it is the first opportunity for MP’s to quiz the governor since the Brexit vote.
10.15am BST
10:15
Here we go. The governor and Bank colleagues take their seats.
10.14am BST
10:14
The Treasury Committee is late starting, we will be bringing you updates once it’s underway...
10.11am BST
10:11
The full story on the FPC minutes from the Guardian’s Jill Treanor:
Related: Bank of England was warned about Brexit property fund problems
10.07am BST
10:07
Quick note before the governor starts...
This from Jasper Lawler of CMC Markets on the relief among investors...
The confirmation of a new UK Prime Minister has offered some welcome certainty in uncertain times. Theresa May as PM has produced no Mayday calls in markets.
The “safe hands” of Mrs May at the helm has actually reduced distress signals. The pound has risen over 1% against the dollar today, adding to yesterday’s gains when Andrea Leadsom ended her campaign to become the Tory party leader.
The certainty of Theresa May stepping into the top job in UK politics ahead of schedule has had the perhaps unintuitive effect of weighing on UK stocks.
It was the drop in sterling that cushioned the ‘Brexit blow’ because of its positive effect on UK company foreign earnings. Subsequently, the rebound in the pound is weighing on the FTSE 100, notably the big multinationals including Vodafone, GlaxoSmithKline and Diageo.
Updated
at 10.09am BST