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Treasury select committee to question Carney on Greek crisis and interest rates Treasury select committee to question Carney on Greek crisis and interest rates
(about 3 hours later)
The Bank of England governor, Mark Carney, will face questions this week about the outlook for interest rates and the precarious situation in Greece when he becomes the first witness to appear before the new-look Treasury committee. The Bank of England governor, Mark Carney, will face questions this week about the outlook for interest rates and the precarious situation in Greece when he becomes the first witness to appear before the new-look Treasury select committee.
The parliamentary committee – one of the most influential in Westminster – will meet on Tuesday for the first time since the general election, the first opportunity for the new members to set out their agendas.The parliamentary committee – one of the most influential in Westminster – will meet on Tuesday for the first time since the general election, the first opportunity for the new members to set out their agendas.
The Conservative MP Andrew Tyrie remains chairman of the committee after his reappointment was unopposed. He will be rejoined by the Conservative MPs Mark Garnier and Steve Baker along with the Labour MP John Mann. The Conservative MP Andrew Tyrie remains its chairman after his reappointment was unopposed. He will be rejoined by fellow Tory MPs Mark Garnier and Steve Baker along with Labour MP John Mann.
Reflecting the shape of the new parliament, the newly elected Scottish National party MP George Kerevan will question witnesses for the first time. Labour MPs Wes Streeting, Bill Esterson and Helen Goodman have also been elected to the committee alongside the Conservatives Jacob Rees-Mogg and Chris Philp.Reflecting the shape of the new parliament, the newly elected Scottish National party MP George Kerevan will question witnesses for the first time. Labour MPs Wes Streeting, Bill Esterson and Helen Goodman have also been elected to the committee alongside the Conservatives Jacob Rees-Mogg and Chris Philp.
Related: Greece poses risk to UK financial system, says Bank of EnglandRelated: Greece poses risk to UK financial system, says Bank of England
Carney will give evidence alongside a team of policymakers from the Bank, includingthe deputy governor Sir Jon Cunliffe and members of the monetary policy committee (MPC) and financial policy committee. The FPC was set up by the coalition government as part of a series of regulatory changes and is tasked with looking for the next risks to financial stability. Carney will give evidence alongside a team of policymakers from the Bank, includingthe deputy governor Sir Jon Cunliffe and members of its monetary policy committee (MPC) and financial policy committee. The FPC was set up by the coalition government as part of a series of regulatory changes and is tasked with looking for the next risks to financial stability.
The Bank warned earlier this month that the Greek debt crisis posed a potential risk to the financial system if it caused a blow to investor confidence and therefore froze buying and selling of certain assets. It also raised a number of other concerns such the buoyancy of the buy-to-let housing sector and the situation in China, where growth has been slowing and stock markets have tumbled in recent weeks. The Bank warned this month that the Greek debt crisis posed a potential risk to the financial system if it caused a blow to investor confidence and therefore froze buying and selling of certain assets. It also raised a number of other concerns such the buoyancy of the buy-to-let housing sector and the situation in China, where growth has been slowing and stock markets have been tumbling in recent weeks.
Tyrie has already indicated that he intends to ask the Bank of England policymakers about the leverage ratio – a gauge of a bank’s financial strength – following the publication of a consultation paper on Friday on how this key measure would operate. Tyrie has already indicated he intends to ask the Bank of England policymakers about the leverage ratio – a gauge of a bank’s financial strength – following the publication of a consultation paper on Friday on how this key measure would operate.
“As the last crisis demonstrated, taxpayers can be put at risk if bank failures lead to contagion. Huge bailout bills can await the taxpayer if banks are over-leveraged and undercapitalised.“As the last crisis demonstrated, taxpayers can be put at risk if bank failures lead to contagion. Huge bailout bills can await the taxpayer if banks are over-leveraged and undercapitalised.
“For these reasons, the leverage ratio is an essential addition to the Bank’s toolkit for improving the stability of the financial system. A good deal of judgment is needed in its implementation and it is crucial that the Bank exercises it,” said Tyrie. “For these reasons, the leverage ratio is an essential addition to the Bank’s toolkit for improving the stability of the financial system. A good deal of judgment is needed in its implementation and it is crucial that the Bank exercises it.”
“The Treasury committee will be asking questions of the Bank of England about the leverage ratio when they come to see the newly formed committee on Tuesday,” Tyrie said. He added: “The Treasury committee will be asking questions of the Bank of England about the leverage ratio when they come to see the newly formed committee on Tuesday.”
The committee will also quiz policymakers about their latest economic forecasts made in the May inflation report, when the Bank cut the outlook for GDP and wage growth but insisted Britain’s economic recovery remained solid. The committee will also question policymakers about their latest economic forecasts made in the May inflation report, when the Bank cut the outlook for GDP and wage growth but insisted Britain’s economic recovery remained solid.
In the quarterly report, the MPC forecast that inflation, currently close to zero, would bounce back to its 2% target at the end of its two-year forecasting horizon.In the quarterly report, the MPC forecast that inflation, currently close to zero, would bounce back to its 2% target at the end of its two-year forecasting horizon.
It predicted GDP growth of 2.5% in 2015, down from the 2.9% it was expecting in February, after the performance of the UK economy was weaker than expected in the first quarter.It predicted GDP growth of 2.5% in 2015, down from the 2.9% it was expecting in February, after the performance of the UK economy was weaker than expected in the first quarter.
That cut was echoed last week by the government’s fiscal watchdog, the Office for Budget Responsibility, which trimmed its growth forecast for 2015 to 2.4%, compared with the 2.5% pencilled in at the time of March’s coalition government budget.That cut was echoed last week by the government’s fiscal watchdog, the Office for Budget Responsibility, which trimmed its growth forecast for 2015 to 2.4%, compared with the 2.5% pencilled in at the time of March’s coalition government budget.