Record of the Bank of England Financial Policy Committee meetings held on 28 June and 1 July 2016

At its meeting on 1 July, following its discussion on 28 June, the Financial Policy Committee

  • Reduced the UK countercyclical capital buffer rate from 0.5% to 0% of banks' UK exposures with immediate effect.
  • Recommended to the Prudential Regulation Authority (PRA) that, where existing PRA supervisory buffers of PRA-regulated firms reflect risks that would be captured by a UK countercyclical capital buffer rate, it reduce those buffers, as far as possible and as soon as practicable, by an amount of capital which is equivalent to the effect of a UK countercyclical capital buffer rate of 0.5%.
  • Welcomed the Bank of England's announcement that it will continue to offer indexed long-term repo operations on a weekly basis until end-September 2016. This is a precautionary step to provide additional flexibility in the Bank's provision of liquidity insurance, further reinforcing the ability of firms to draw on their own liquidity buffers.
  • Supported the position of the PRA to allow insurance companies to use flexibility in Solvency II regulations to recalculate transitional measures. These measures smooth the impact of those new regulations.

Also noted:

  • Brexit seriously increases risk outlook

Full Minutes here

Nothing of real note here GBPUSD still holding some gains at 1.3133 as we wait on Carney's testimony to lawmakers in his capacity as head of Financial Stability Board at 09.00 GMT

The objectives of the Committee are to exercise its functions with a view to contributing to the achievement by the Bank of England of its Financial Stability Objective and, subject to that, supporting the economic policy of Her Majesty's Government, including its objectives for growth and employment. The responsibility of the Committee, with regard to the Financial Stability Objective, relates primarily to the identification of, monitoring of, and taking of action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system