Reuters Insider - Catch-up with Carney

Fbc Holding

24/10/2013 19:43

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        Mark Carney talks to the press four months after  
                     taking the helm as Governor of the Bank of        
                     England.                                          
 
 
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 Transcript (May be auto-generated)                                    
                                                                       
 To review it on an annual basis. Starting to -- from a year from now. But in the -- -- put this more. General context which is the issue -- sustainability in the housing market. Potential issues for. Financial stability that could arise from developments in the housing market whether actual work -- perspective. Something that is the responsibility. Amongst many others of the financial policy committee. The FTC has to take an assessment of those vulnerabilities. In the context of that assessment. Or those 
 assessments because it's not just devote the next meeting of subsequent meetings and beyond. It has to consider. Whether. Any action should be taken. And in that consideration it will take into account. A broad range of tools that are available to it into others they could be used so certainly not limited to the terms of one government program there there there a variety of ways to address this. All of that said. If you don't include this in your report if you write on it. That is not to say that is that 
 not -- presuppose that any action. He's been taken them on pre judgment -- decision via BC within the next -- parents of school. -- Respectively Sudanese government and are you happy with the distribution. All the economic crisis in the country can expect to treatment to its assessment. Yeah well Richard Wright I think the fighting speech today about the financial services sector which and one of the points -- tried to make was that there is a broader distribution and financial services sector across the U. 
 Com. But let me go to geographic distribution what's absolutely clear. To us -- the bank and this is the point that myself my colleagues have discussed as we go around the country is that the recovery is. In recovery this just in the southeast is notices that ultimately sustainable. Recovery for the UK so it's going to turn on them on the -- is committed. Turn on what happens in the north. And Scotland it. We -- it needs to be broad. It needs to be abroad coverages to truly be missed -- a sustainable we're 
 seeing some broadening in geographic terms of the recovery. What we have not yet say. Is broadening across the components of GDP. Away from just. A concentration if you will have to postal. You've been BBC. Governor when you set forward kilotons. You know -- humid pretty clear is that you would consider a rate -- isn't so. Unemployment fell to 7%. And it was pretty impressive that would but between 2016 because of the points projections from employment and assumptions. Since then has been a lot of 
 speculation about 7% being hit earlier than that. And something from him and NPC members that the U re calibrate your unemployment for cost in the November that'll settlement they MPC saying. Rates could even rise next year. What message could you can you to no excuse households and businesses -- The likely timing of difference. Well I agree with the first sentence in your question which was made it pretty clear that we wouldn't consider. Raising interest rates until unemployment. Reached 7% I don't agree 
 with the second party. Question which went into. Went into a specific calendar and will we tried to do. When we when released guns were negative that as much information as we could about the probabilities. Over which these the threshold could be achieved. Two that were relative probability whether it was them when he sixteenth when he 152014. That that 7% threshold could be achieved. And what we have seen since then. Has been in the economy has been a little stronger which is welcome. More jobs have been 
 created than we had expected which is also welcome. Inflation has edged down as as broadly is we would've expected inflation expectations of health. And the message to households to businesses. Is that the recovery has policy begun. It is strengthening. But we are not going to withdrawal. Monetary stimulus until it's really gain that traction and we're using the 7% unemployment threshold something you report everyone in this room reports. The unemployment rate when it comes something that matters to people 
 across the country these -- real people real jobs real people looking for jobs. We're using that as the staging post for when we reassess. Monetary policy. And begin to think about. Raising raising interest rates so look if we make -- their faster because economies growing. More rapidly because more jobs there are being created we will then assess make that assessment. More rapidly in time but it's about conditions. It's not about -- Comes as it started earlier of the of the guardian and can you explain the 
 fact that the recovery such as is seems to be driven by the council -- yet real wage is -- down. Has been in just Larry is pocono and in his savings rate means that that is always somewhat imperfect winners here. The US or anywhere else. But there has been stepped down in in the rate of savings of households. Over the the last couple quarters so there's that adjustment. There are more people in work. So that helps as well so more people actually -- -- wage the word before. And that would there hasn't been 
 it's been a sharp uptick in borrowing we in in our forecast in August of civil updated. In a few weeks but in our forecast in August we didn't see. Consumer borrowing. Picking them forward for consumption -- -- we -- consumption growth largely in line with income growth and income growth being relatively modest as you say. So that's one of the reasons why despite the fact. That the UK economy is it is is still just coming back to its level in 2008. Growth well it's improved -- strengthened is still 
 relatively modest. Relative to historic recovers the rate in in historic recoveries because we don't see expansion. In in certain expansion and incomes and then it and the constraint. On the growth of consumption is more vote. The growth of incomes. And maybe -- make one last point if -- -- just completed. Which is this is one of the many reasons why it matters what happens to productivity. Because their view is is that. Ultimately that real growth and incomes is gonna come if -- productivity -- to pick up  
 -- rapidly. We've only seen initial signs. -- Chris Johnson their Financial Times coming a speech you said the bank for them to. Was now open for business in terms of its Tikrit the operations. Should we now -- banks might in those woods and start taking excessive risks him. Ultimately it's fair question I think and then when he -- to his one his. What why do we feel it necessary to say that. And the answer is that there is there's a stigma that develops in terms of using Central Bank facilities. And there 
 are. Certain classes of the Central Bank facilities this emergency lending. Which sounds exactly like it is four individual institutions I didn't talk about that today. But the nerve or the regular facilities -- you know of the Central Bank that are there to be used. And the point we're making is that and as markets develop as as as collateral. Becomes more important or important to market functioning we the regulators by the way -- making it more important market function but it's also some lessons of the 
 crisis. As that becomes more important. Those collateral markets. In the management of collateral will become more important and the and the ability of the Central Bank can play a role in ensuring that those markets are always there. And and that's the so that when there's a shock to those markets. Firms have -- -- and have have an alternative which is run a competitive auction based two to reach to the Central Bank. The last point they'll make in terms of your your your question -- question is. This isn't 
 happening in isolation. The change to equity facilities in fact the prerequisite for changes in equity facilities was much tougher. Liquidity regulation in fact really for the first time true regulation supervision act active supervision of liquidity at banks. And and that's we've been doing. And partly the consequences of this substantially increase. Actually acquitted yet banks. Our job and you'll hold to account picture as others will is to make sure that that. Is still the case three years five years 
 ten years room. She lesson from the times and you in just funding for lending and wondered if he were to endorse helped define and if you worry that it's exacerbating. This sort of move away from rebalancing the economy concentration. Activity in and credit. In the housing market which is traditionally -- huge part of the economy. Well. Funny for lending is a Bank of England. For holds. The others on policy the Bank of England I think it is there is today. In appropriate separation between the our policies 
 and the policies of the government whenever government this. And it's it's -- we we have to be very careful. Crossing crossing those boundaries. We take government fiscal policies in and we take government housing policies in the and and we optimize. Within our responsibilities. Given those decisions that elected. Governments take. I think bill will save -- helped -- is that. It is. It it it it is -- very welcome. That the FTC has an opportunity to review. The terms. How -- on an annual basis and I'll refer 
 back to my answered yes to Jennifer. The fact that the FBC has many other tools that it could use if it were to decide that there are issues in the housing market that needed to to be addressed. We've got time just one Mormon -- and is known them for a long time and. -- happen choose an independent government many -- would being struck by the contrast between the -- fuel speech tonight in regard to this it's in London on the rescue princess. Is this a new start for the punting and diminished the city and do 
 you think it's posted jolt of the government by getting to be. A cheerleader and promotes or the activities of this achievement. -- well. And deal with segment no it's not part of the job the governor's and we're not surely for the city witnesses -- -- that that's not mrs. The point is two recognized a couple of fax London is a global financial. Senator. Financial services incredibly important to the UK economy is more than just about London spreads across the economy. Global London serves the role in the 
 UK's serious role in maintaining open global system. The only way. That we can continue to do so and responsibly do so is to organize the system. Both on the banking side and the market's side. Four resilience and that requires a bunch of reforms if we don't and too big to fail if we don't accomplish with some of the things that I said and war. In this speech today too big to fail. We cannot support the financial. Sector of of the size we have let alone one that grows. If we don't. Derivative markets work. 
 Then we shouldn't have those markets of the size they are in the UK because of the ultimate risk that would come back here. And and and we have a role to play both in the design and implementation of reforms as well us. In the in the plumbing of central banking in the provision of liquidity. But with a McNamee say so they vote. Where is the situation relative to what the bank has been doing before. Lord king and I worked very closely in our previous rules on a number of these reforms. And domestically and 
 number of things that the Bank of England in the lord king personally land. Have set the stage. To have a speech like -- today is to talk about some of the initiatives. That that I race today. And told the domestic banking system have been fixed the recapitalization happen. We we couldn't be here some of the structural measures that have been put in place when -- through -- CB which he helped capitalize. We couldn't be here because they're part of -- thing. Too big to fail a -- there as some of the 
 compensation initiatives the cultural issues and others that what can put in place. The point is to what end once once that is there we still have a global financial system is here that's important for all the reasons I referenced and how do we then sustainably. Maintain the bank's role is to figure out. The credential aspects of that equation which which we will do here domestically but importantly internationally through via -- the what the city does with it with the broader financial. Services industry 
 across the country does in that context is entirely. Up to them. And and and we leave them and and and obviously to actually. Well I'm afraid we really aren't times. Thank you very much indeed for coming. Consistent with what