Bank of England

Bank of England says Metro can fund future growth

Metro bank branch sign
DAN KITWOOD

The Bank of England's regulatory arm, the Prudential Regulation Authority, regulates Metro Bank and a Bank spokesperson has responded to that announcement that the lender has raised £375m of fresh funding - more than the £350m initially planned.

“The Prudential Regulation Authority welcomes the steps taken today by Metro Bank. Metro Bank is profitable and continues to have adequate capital and liquidity to serve its current customer base. It has raised additional capital in order to fund future growth," the Bank of England spokesperson said.

Rate rises to be 'limited and gradual'

Today Programme

BBC Radio 4

Ben Broadbent
Reuters

As expected, the Bank of England left the UK's key interest rate unchanged yesterday, but the governor Mark Carney said investors were underestimating how fast rates may rise, in the event of a smooth Brexit.

Mr Carney's deputy Ben Broadbent is on the Today programme.

"The market is barely pricing one rise over the next three years," he laments. Even so, he doesn't think a panic is in order.

"One quarter point rate rise per year - I wouldn't describe that as particularly dramatic", he says.

"Indeed as we have said for many of the past few years, we expect the path of interest rates as and when they do go up - that rise to be limited and gradual".

Signs telling Bank of England to act

BBC Radio 5 Live

Wake Up To Money

chart
BBC

The Bank of England left interest rates unchanged yesterday but said rises could be "more frequent" than expected if the economy performs as expected.

Macquarie economist Eimear Daly told Radio 5 Live's Wake Up To Money: "All the signs were telling the central bank it’s time to raise interest rates, the economy is getting bank to normal but we've got the Brexit – the big white elephant in the middle of the room- so effectively, he’s been disabled to act because there is so much political uncertainty".

Carney warns of more interest rate rises than expected
Bank of England chief Mark Carney said there could be more interest rate increases than currently thought.

Businesses more prepared for Brexit

Szu Ping Chan

Business Reporter, BBC News

flag and coins
Getty Images

As Mark Carney's press conference draws to a close, just a few other items the Bank of England has mentioned today.

Bigger firms were more likely to be prepared for Brexit than smaller ones, with many smaller companies saying the costs associated with planning for a no deal were either too high or not worth it.

The Bank’s survey of 360 businesses, representing more than half a million employees was conducted before the decision to extend the Brexit negotiation period to October.

The Bank went back and asked a few if the extension had affected their decisions.

Most said they were unlikely to reverse their plans, and that they would continue to hold back investment spending until there was more clarity on Britain’s future relationship with the EU.

Interest rates linked to climate change?

Szu Ping Chan

Business Reporter, BBC News

protestors
Getty Images

Mark Carney was also asked about climate change.

He says the Bank’s job as a whole is to be ready to deal with all types of risk, including climate change.

Policymakers need to be “thinking about where policy is going as well as where climate change is going”.

In terms of interest rates, Mr Carney says that the “tragedy” of the interest rate setting policy horizon is that their job is to look two or three years ahead, not five years forward or a decade.

“When it becomes relevant for monetary policy it will be too late”, Mr Carney adds. What policymakers across the whole Bank can do is “make sure the system is not only ready but actively managing issues” and “seizing opportunities linked to a low carbon economy”.

The UK does set an example for the rest of the world, he adds.

Back to mortgage rates

Szu Ping Chan

Business Reporter, BBC News

for sale sign
Getty Images

Is the Bank worried that when it comes to raising interest rates, competition and changes to the banking sector mean its decisions won’t have the same impact on raising the cost of consumer borrowing as in the past?

Mr Carney says this is an important question and why it’s important not to rely on “old models and historic relationships”.

He notes that borrowers have also shielded themselves from the impact of rate rises by fixing their mortgages.

For example, Bank of England data show that 90% of new mortgages issued in the final three months of 2018 were at fixed rates.

This compares with less than 50% a decade ago. The overall stock of mortgages in the UK at fixed rates has grown from 52% to 68%.

Time for a woman governor of the Bank of England?

Szu Ping Chan

Business Reporter, BBC News

Bank of England
Getty Images

Recruitment firm Sapphire Partners has been asked to carry out the search for the new governor to replace Mark Carney.

He says where the Bank has the power to make hiring decisions, it has taken. “very deliberate comprehensive steps to shift those” towards more diversity at the Bank.

He says there are more women in senior management positions, up from 17% in 2013 to 31% today and “on track” to reach its 35% objective.

“We’re making progress”, he says. “We’re shifting the dial on that no question”.

But when it comes to the decision on who will become the next governor, or anyone who sits on any of the policy making committees, including the Monetary Policy Committee that sets interest rates, Mr Carney says those are decisions for the government.