No dissent on BOE’s decision to cut banks’ capital requirements after Brexit
No Bank of England policymakers objected to a decision to cut banks’ capital requirements at a meeting in the wake of Britain’s vote to leave the European Union, a record of their meeting showed on Tuesday.
Last week the BoE’s Financial Policy Committee lowered a capital requirement for banks, reversing a decision made in March in an attempt to cushion the expected shock to Britain’s economy from the referendum result.
“As the outlook evolved, the FPC stood ready to take any further actions deemed appropriate to support financial stability,” the record said in language which echoed its half-yearly Financial Stability Report from July 5.
Sterling has fallen by more than 10 percent to a 30-year low against the dollar and British banks’ share prices have tumbled after the referendum result.
But spreads on lending rates between banks – a key gauge of stresses to the financial system – have risen by far less than they did in the 2007-09 financial crisis.
The record also showed that Britain’s Financial Conduct Authority briefed the central bank on the risk that real estate funds would have to suspend withdrawals by investors, several days before this started to take place.
More than 18 billion pounds in property funds aimed at retail investors was frozen last week after redemption requests flooded in following the June 23 Brexit vote.
The Bank could cut interest rates as soon as Thursday, after its monthly Monetary Policy Committee meeting, although most economists who took part in a Reuters poll last week expected a first rate cut only in August.
