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BoE does not see risk of tighter financial conditions on horizon, Carney says

Wed, 11th Jan 2017 15:24

(ShareCast News) - The Bank of England does not see the risk of a significant tightening in financial conditions on the horizon, the Governor of the BoE said.

However, much of the focus of the early part of his testimony before the Treasury Select Committee was on whether he still believed that Brexit was the major risk facing the UK's financial system.

Mark Carney reiterated that it was not but explained that Brexit could amplify the risks stemming from around the world.

"In the run up to the referendum, we felt it was the largest risk because here were a series of positions and possibilities in the financial sector, things that could have happened, that would have had financial stability consequences.

"Having got through the night and the day after, the scale of the immediate risks around Brexit have gone down for the UK," he said.

In his remarks, Carney also stuck by his judgement that the risk analysis around Brexit was right and the Bank of England's actions after the referendum helped to reduce the severity of those risks.

Indeed, the Bank's actions following the referendum vote helped to avoid the tightening in financial conditions which might otherwise have ensued, Carney added.

To take note of, when queried if Trump's election had raised the level of financial stability risks, another external FPC member, Anil Kashyap, said the level was roughly unchanged for now.

As of 1515 GMT the yield on the benchmark 10-year Gilt was down by two basis points to 1.35% while cable was down 0.6% to 1.2095.

In parallel, the US dollar spot index was jumping 0.82% to 102.85.

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