KING ON PUBLIC ANGER ABOUT CUTS
"This is a big political problem for you. Now is the period when the cost is being paid. I'm surprised the real anger hasn't been greater than it has."
MILES ON ECONOMIC DAMAGE
"I think it is very unlikely that we get back to a trajectory that we might have stayed on if we hadn't got into the financial mess of 2007/08. I don't think that means that we can't hope and expect a growth rate that looks fairly average and normal in the longer context of history. But I think we have had some lasting damage on the economy and that is a reflection on just how damaging a financial crisis can be."
KING ON FALL IN LIVING STANDARDS
"The squeeze on living standards is inevitable in aggregate because of what happened. We have to accept to accept that squeeze and we will find a way through it."
KING ON RAISING RATES AS GESTURE
"To raise interest rates just to make a gesture or a signal is self-defeating because we would then find ourselves below target looking further ahead."
KING ON REDUCING BUDGET DEFICIT
"To have a plan to reduce this enormous budget deficit over a period of five years is the right thing to have because otherwise we would all suffer. The interest rate at which we can borrow has fallen relative to German Bund yields, which is the benchmark, whereas otherwise if we had had no plan to deal with the deficit it almost certainly would have risen."
KING ON STERLING
"We are not seeing a continuously declining exchange rate. We have seen a big movement in sterling which in and of itself added six percentage points to the domestic consumer price level."
FISHER ON IMPACT OF VAT RISE
"VAT added 1.5 percentage points to the level of CPI inflation. The change means the curent rate of CPI is around 1.5 percentage points higher than it would have been without the VAT change."
KING ON BOE'S REMIT
"I don't share that view [that the BoE's remit should be more like that of the U.S. Federal Open Market Committee] because I think the problem with the FOMC remit is that it can lead people to think that there is a long-run trade-off between inflation on the one hand and output and employment on the other. I do not believe that to be true."
KING ON INFLATION EXPECTATIONS
"We accept that inflation expectations are crucial to evaluating the medium outlook for inflation. I don't believe we've yet seen signficant evidence of a pick up in medium term inflation expectations.
"It's reasonable to believe that if we continue to experience above target inflation for long enough there could be an upside risk to inflation expectations."
KING ON OIL PRICES
"Oil prices have risen by a third since November, half of the rise had taken place by February, that was clearly factored into our projections. We assumed that oil prices would follow the path implied by market expectation. Clearly it's risen since. An awful lot will hinge on how far this rise in oil prices persists, whether the situation in the middle east become clarified and it falls back again.
"These are very uncertain factors, these are the things that do move inflation around, not just up but down too."
KING ON FISCAL CONSOLIDATION
"We think that that fiscal consolidation over five years will have a dampening effect on the growth of demand. We have certainly discussed the case for and against fiscal consolidation (with the chancellor) and I have explained to him the stance that the MPC has taken on monetary policy."
KING ON CUTTING RATES FURTHER
"I don't think it is likely that under any circumstances the committee will try to cut bank rate below the 0.5 percent."
KING ON PROJECTIONS
"The projections that we published in the inflation report a couple of weeks ago have the characteristic that the inflationary pressures are pretty much back to target by around the middle of this year. But of course that doesn't show up in the 12-month measure until well into 2012."
KING ON INFLATION OUTLOOK
"Financial markets clearly do not believe that the rate of increase of prices that we have seen will persist, even if the levels will persist.
"The broad judgement of the committee is that the increase in inflation that we have seen in the short-run would be expected to come back towards the target and the debate on the committee is not about whether that will happen, but it's about the speed and the extent to which inflation will fall back to the target.
"I would certaintly expect to be writing letters through the rest of this year."
TUCKER - NEW RULES COULD LEAD TO BANK RESTRUCTURING
Asked if the emphasis of new bank regulations on how to wind-down banks was likely to lead to a large restructuring of banks, Tucker said: "I think it could over time. I think that's possible."
KING - REGULATORS SHOULD ALLOW ORDERLY FAILURE OF BANKS
"The objective of supervision is to recognise that banks will fail. Our role is not to stop them failing, it is to make sure than if they fail, they do not contaminate the rest of the economic and financial sector."
KING - SHOULD NOT HAVE TO CONSULT WITH INDUSTRY ON NEW RULES
"At present, before any individual regulatory act can be made or changed, there has to be a detailed cos/benefit study in consulation with the industry. It makes no sense for the regulator to go through those steps, it should go through you. We shouldn't be accountable to industry itself. That was one of the things that had gone wrong."
"Our job is to make sure there are limits on how much risk is taken."
KING - NEED INTRUSIVE REGULATOR
"I do think one of the lessons is, that the kind of regulations needed to avoid something like a BCCI, which is to do with fraud, poor conduct -- is the need to have an intrusive regulator looking at conduct issues and enforcement, that will go with the FCA.
"Prudential supervision is different. That is something I hope the new arrangement -- a combinatin of the PRA and the new FPC, focussing on system-wide developments -- will give us a better chance of dealing with these problems than last time.
"It's a big mistake to think we sholud have had twice as any regulators or twice as many rules .... that isn't the answer."
KING ON AMENDING EXISTING REGULATION LAW
"I think we'll get the right approach. I think we feel it would have been easier had it been done through a new act. As far as I understand, we're going to get amendments to FISMA. Yes, I think it would have been better had we had a new act."
Source: Highlights of Bank of England testimony to MPs - Telegraph
This would have never happened under Liebor.
"This is a big political problem for you. Now is the period when the cost is being paid. I'm surprised the real anger hasn't been greater than it has."
MILES ON ECONOMIC DAMAGE
"I think it is very unlikely that we get back to a trajectory that we might have stayed on if we hadn't got into the financial mess of 2007/08. I don't think that means that we can't hope and expect a growth rate that looks fairly average and normal in the longer context of history. But I think we have had some lasting damage on the economy and that is a reflection on just how damaging a financial crisis can be."
KING ON FALL IN LIVING STANDARDS
"The squeeze on living standards is inevitable in aggregate because of what happened. We have to accept to accept that squeeze and we will find a way through it."
KING ON RAISING RATES AS GESTURE
"To raise interest rates just to make a gesture or a signal is self-defeating because we would then find ourselves below target looking further ahead."
KING ON REDUCING BUDGET DEFICIT
"To have a plan to reduce this enormous budget deficit over a period of five years is the right thing to have because otherwise we would all suffer. The interest rate at which we can borrow has fallen relative to German Bund yields, which is the benchmark, whereas otherwise if we had had no plan to deal with the deficit it almost certainly would have risen."
KING ON STERLING
"We are not seeing a continuously declining exchange rate. We have seen a big movement in sterling which in and of itself added six percentage points to the domestic consumer price level."
FISHER ON IMPACT OF VAT RISE
"VAT added 1.5 percentage points to the level of CPI inflation. The change means the curent rate of CPI is around 1.5 percentage points higher than it would have been without the VAT change."
KING ON BOE'S REMIT
"I don't share that view [that the BoE's remit should be more like that of the U.S. Federal Open Market Committee] because I think the problem with the FOMC remit is that it can lead people to think that there is a long-run trade-off between inflation on the one hand and output and employment on the other. I do not believe that to be true."
KING ON INFLATION EXPECTATIONS
"We accept that inflation expectations are crucial to evaluating the medium outlook for inflation. I don't believe we've yet seen signficant evidence of a pick up in medium term inflation expectations.
"It's reasonable to believe that if we continue to experience above target inflation for long enough there could be an upside risk to inflation expectations."
KING ON OIL PRICES
"Oil prices have risen by a third since November, half of the rise had taken place by February, that was clearly factored into our projections. We assumed that oil prices would follow the path implied by market expectation. Clearly it's risen since. An awful lot will hinge on how far this rise in oil prices persists, whether the situation in the middle east become clarified and it falls back again.
"These are very uncertain factors, these are the things that do move inflation around, not just up but down too."
KING ON FISCAL CONSOLIDATION
"We think that that fiscal consolidation over five years will have a dampening effect on the growth of demand. We have certainly discussed the case for and against fiscal consolidation (with the chancellor) and I have explained to him the stance that the MPC has taken on monetary policy."
KING ON CUTTING RATES FURTHER
"I don't think it is likely that under any circumstances the committee will try to cut bank rate below the 0.5 percent."
KING ON PROJECTIONS
"The projections that we published in the inflation report a couple of weeks ago have the characteristic that the inflationary pressures are pretty much back to target by around the middle of this year. But of course that doesn't show up in the 12-month measure until well into 2012."
KING ON INFLATION OUTLOOK
"Financial markets clearly do not believe that the rate of increase of prices that we have seen will persist, even if the levels will persist.
"The broad judgement of the committee is that the increase in inflation that we have seen in the short-run would be expected to come back towards the target and the debate on the committee is not about whether that will happen, but it's about the speed and the extent to which inflation will fall back to the target.
"I would certaintly expect to be writing letters through the rest of this year."
TUCKER - NEW RULES COULD LEAD TO BANK RESTRUCTURING
Asked if the emphasis of new bank regulations on how to wind-down banks was likely to lead to a large restructuring of banks, Tucker said: "I think it could over time. I think that's possible."
KING - REGULATORS SHOULD ALLOW ORDERLY FAILURE OF BANKS
"The objective of supervision is to recognise that banks will fail. Our role is not to stop them failing, it is to make sure than if they fail, they do not contaminate the rest of the economic and financial sector."
KING - SHOULD NOT HAVE TO CONSULT WITH INDUSTRY ON NEW RULES
"At present, before any individual regulatory act can be made or changed, there has to be a detailed cos/benefit study in consulation with the industry. It makes no sense for the regulator to go through those steps, it should go through you. We shouldn't be accountable to industry itself. That was one of the things that had gone wrong."
"Our job is to make sure there are limits on how much risk is taken."
KING - NEED INTRUSIVE REGULATOR
"I do think one of the lessons is, that the kind of regulations needed to avoid something like a BCCI, which is to do with fraud, poor conduct -- is the need to have an intrusive regulator looking at conduct issues and enforcement, that will go with the FCA.
"Prudential supervision is different. That is something I hope the new arrangement -- a combinatin of the PRA and the new FPC, focussing on system-wide developments -- will give us a better chance of dealing with these problems than last time.
"It's a big mistake to think we sholud have had twice as any regulators or twice as many rules .... that isn't the answer."
KING ON AMENDING EXISTING REGULATION LAW
"I think we'll get the right approach. I think we feel it would have been easier had it been done through a new act. As far as I understand, we're going to get amendments to FISMA. Yes, I think it would have been better had we had a new act."
Source: Highlights of Bank of England testimony to MPs - Telegraph
This would have never happened under Liebor.
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