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Bank Of England Fpc Policy Mtg Statement

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http://www.bankofengland.co.uk/publications/Pages/news/2014/025.aspx

At its meeting on 19 March 2014, the Bank of England’s Financial Policy Committee (FPC) reviewed its assessment of risks to financial stability and, in light of that assessment, progress against its existing set of policy recommendations. The Committee did not make any new recommendations.

There was continued evidence of increasing momentum in the UK housing market, although a number of indicators remained below their long-run average levels. Mortgage approvals had risen by 40% in the year to January, though they remained 20% below their long-run average. Prices had risen by around 10% at a national level over the year to February 2014, according to the average of the main lenders’ indices, and 5.5% over the year to December 2013 using ONS data, with increases seen in all UK regions over the second half of 2013. In a continuation of a longer-term trend, mortgages at loan to income ratios above four times accounted for a higher share of new mortgages in Q3 than at any time since the data series began in 2005. New mortgage lending at high loan to value ratios remained low by historical standards, though the number of mortgage products offering higher loan to value ratios had doubled over the previous six months. In the November 2013 Financial Stability Report, the FPC announced initiatives to reduce stimulus, reaffirmed measures already in train and outlined further instruments it had available to mitigate potential risks from the housing market. Given the increasing momentum, the FPC will remain vigilant to emerging vulnerabilities, will continue to monitor conditions closely and will take further proportionate and graduated action if warranted. As set out in November, measures were being put in place by the Financial Conduct Authority (FCA) with effect from April as part of the implementation of the Mortgage Market Review to help maintain stronger mortgage underwriting standards. The FPC welcomed the work being done by the FCA to allow the FPC to give guidance on appropriate interest rate stress tests to be used by banks in their affordability tests. Subject to consultation and further consideration by the FCA Board, this instrument could be available to the FPC from its June meeting

Against this backdrop, the Committee discussed the appropriate scenario for the 2014 bank stress testing exercise, with a focus on the UK component. The scenario was not intended to be the FPC’s expectation of what would happen, but a coherent tail risk event against which banks’ resilience could be tested. A key part of the scenario would examine the resilience of the banks to a housing market shock and to a snap back in interest rates. The 2014 stress test framework would be finalised in conjunction with the PRA Board in due course, with an intention to publish the scenario by the end of April as an additional macroeconomic sensitivity to the EU-wide scenario being developed by the European Systemic Risk Board and the European Banking Authority.

Remaining vigilant and monitoring closely.

Ahh.....Bisto.

.

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A key part of the scenario would examine the resilience of the banks to a housing market shock and to a snap back in interest rates.

If BOE control interest rates and give us forward guidance, then why do they need to stress test banks against a snap back in interest rates?

You could conclude that BOE is conspiring against the population by keeping rates low and giving them forward guidance in the full knowledge that there will be a 'snap back in interest rates' once all of the dumb money is on the table and the banks won't go bust in the process.

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If BOE control interest rates and give us forward guidance, then why do they need to stress test banks against a snap back in interest rates?

You could conclude that BOE is conspiring against the population by keeping rates low and giving them forward guidance in the full knowledge that there will be a 'snap back in interest rates' once all of the dumb money is on the table and the banks won't go bust in the process.

Well yes, this has been the plan all along.

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Given the increasing momentum, the FPC will remain vigilant to emerging vulnerabilities, will continue to monitor conditions closely and will take further proportionate and graduated action if warranted.

Of course that means nothing.

The BoE, the FSA and the Treasury etc all had ample time to "remain vigilant" over decades and look what happened - so the 1 year old FCA remaining vigilant is utterly meaningless. They'll just be going back to sleep and claiming their wages. When it all goes "pop" they'll all be saying "what!? I don't work at the FCA I just claim wages".

Within it's 1 year existence it's already failed to notice the London house price bubble with prices reported to be increasing at the rate of tens of thousands per month.

"Remain vigilant" :lol::lol:

Edited by billybong

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Remaining vigilant and monitoring closely.

My border collie used to do that to sheep.

Seriously what is the use of having an 'independent' central bank if the w*ankers are too scared to do anything that the Government don't like?

It's obvious that the BoE thinks that Osborne is blowing another housing bubble and equally obvious they intend to do nothing to stop it. :lol:

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My border collie used to do that to sheep.

Seriously what is the use of having an 'independent' central bank if the w*ankers are too scared to do anything that the Government don't like?

It's obvious that the BoE thinks that Osborne is blowing another housing bubble and equally obvious they intend to do nothing to stop it. :lol:

It's code. Nod and a wink.

When they say 'we remain vigilant & are monitoring the situation' they mean 'fill yer boots you've got another 2-3 years before we'll start doing anything'. 'proportional' = 'will only impact the real morons', 'graduated' = 'firmly behind the curve'

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It's code. Nod and a wink.

When they say 'we remain vigilant & are monitoring the situation' they mean 'fill yer boots you've got another 2-3 years before we'll start doing anything'. 'proportional' = 'will only impact the real morons', 'graduated' = 'firmly behind the curve'

We'll see. The poor central bankers do appear to be running out of ammunition with which to re-levitate the global economy. ZIRP has failed. The money multiplier has failed. Unlimited QE has failed. The last resort appears to be an eldritch prices and incomes policy half-resurrected from the Wilson years. Hmmm...

Peak Oil and the zero bound say not f***ing likely. At least to me they do.

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Their definition of 'long run average' seems to relate to the period december 2006-June 2007..

+1

Heard this period being used as the "norm" by various VIs, drives me nuts. If it was truly the "norm" then why did that period result in the CC? Clinically they're insane not stupid.

Carney ready to clamp down on housing bubble, like heck he will. We've all heard him denying any bubble, it's all just a few tiny hot spots which don't bother him, i.e. the whole of southern England. :angry:

Funnily enough I've notice a few VIs sighting the ripple effect from London as to the reason they're been raising their valuations.

Edited by Blod

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My border collie used to do that to sheep.

Seriously what is the use of having an 'independent' central bank if the w*ankers are too scared to do anything that the Government don't like?

It's obvious that the BoE thinks that Osborne is blowing another housing bubble and equally obvious they intend to do nothing to stop it. :lol:

thats because "the housing market" for the BoE is NOT the housing market we know and love...Their Housing Market is Mortgage Sales...hence they dont give a frack about the poor saps who cant pay the mortgages in their "scenario", they care about the banks ability to survive the defaults en mass.

The stress tests should be applied at the time of LENDING, not to the time of DEFUALTING.

These con men are actually and metaphorically looking at what will happen long after the horse has bolted, and they arent even bothering to shut the stable door, for they know that would be utterly pointless.

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Carney is being paid what? 800,000 of your English pounds every year to be a lapdog, I would be Osborne's bitch for half that amount. If Carney has half a brain it must be frustrating to have to pretend there is no property bubble when the man on the Clapham omnibus can see it, still lots of cash and expenses to look the other way.

Carney has explicitly stated that the BoE have NO TOOLS to deal with the foreign cash buyers.

In other words 'not my problem guv'.

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