"A significant numbers of households might have to cut spending or work longer hours to keep up their debt repayments if interest rates rise suddenly. The warning from the Bank of England came as it called for an urgent assessment of the impact from a sharp rate increase after four years of low borrowing costs.
The Bank also used its financial stability report to give banks permission to release £70bn of easy-to-sell instruments, such as government bonds, which they have been forced to hold in case there is a re-run of the 2007 credit crunch.
Paul Tucker, outgoing deputy governor for financial stability, said it would be "foolhardly" to predict how much of the £70bn of liquidity being released might feed through into lending. But, he said, the relaxation of the rules would "strike the appropriate balance between achieving resilience and reducing possible impediments to the supply of credit to the economy".
The report made six recommendations intended to avert another banking crisis including calling on the Treasury to examine whether banks are ready for a cyber attack and make banks reassess the way they measure risks. The first recommendation in the report, used by the new financial policy committee (FPC) to spot the next big risks to the financial system, focused on the impact of rising interest rates. Financial markets have already been spooked by concerns that the Federal Reserve might start to reduce the $85bn (£55bn) a month stimulus being pumped into the US economy with traders pointing to faster than usual rises in government bond yields."
Bank of England calls for assessment of interest rate rises on borrowers | Business | The Guardian
AtW's comment - when rates are at 0.5% level they can only go up ...
The Bank also used its financial stability report to give banks permission to release £70bn of easy-to-sell instruments, such as government bonds, which they have been forced to hold in case there is a re-run of the 2007 credit crunch.
Paul Tucker, outgoing deputy governor for financial stability, said it would be "foolhardly" to predict how much of the £70bn of liquidity being released might feed through into lending. But, he said, the relaxation of the rules would "strike the appropriate balance between achieving resilience and reducing possible impediments to the supply of credit to the economy".
The report made six recommendations intended to avert another banking crisis including calling on the Treasury to examine whether banks are ready for a cyber attack and make banks reassess the way they measure risks. The first recommendation in the report, used by the new financial policy committee (FPC) to spot the next big risks to the financial system, focused on the impact of rising interest rates. Financial markets have already been spooked by concerns that the Federal Reserve might start to reduce the $85bn (£55bn) a month stimulus being pumped into the US economy with traders pointing to faster than usual rises in government bond yields."
Bank of England calls for assessment of interest rate rises on borrowers | Business | The Guardian
AtW's comment - when rates are at 0.5% level they can only go up ...
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