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BOE Sees Potential Stability Risks From Sharp Rate Increases 

April 3, 2014
Emma Charlton, Businessweek

Bank of England officials said any sharp increase in interest rates poses financial stability risks and it is difficult to assess the impact of such developments.

While “market participants expected a shift in monetary stance at some point in the future,” the eventual transition “could pose challenges in some sectors of the financial markets, particularly if global monetary policy stances were to adjust more abruptly than expected,” the BOE’s Financial Policy Committee said today.

The comments were made in the minutes of the FPC’s March 19 meeting published in London today. They echo the Financial Stability Board, which said yesterday that the improving global economic environment doesn’t reduce the need for banks to strengthen their resilience. The FPC said “low levels of volatility and interest rates were reported to be fueling a range of carry trade positions.”

Read more: Businessweek

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