Market News

Bank of England warns that some global asset valuations appear stretched - REUTERS

OCTOBER 10, 2023

By David Milliken and Huw Jones

LONDON, Oct 10 (Reuters) - The Bank of England said on Tuesday that valuations for some financial assets appeared stretched, particularly for U.S. tech stocks and dollar-denominated corporate bonds.

"The overall risk environment continues to be challenging and near-term growth prospects remain subdued," the BoE's Financial Policy Committee (FPC) said after a quarterly meeting.

The FPC continued to judge that Britain's banks and broader financial system remained resilient, and it held banks' counter-cyclical capital buffer (CCyB) - a risk management tool - unchanged at 2%.

"The FPC will continue to monitor developments closely and stands ready to vary the UK CCyB rate, in either direction, in line with the evolution of economic and financial conditions," it said.

Some FPC members had argued for an increase in the rate, to boost banks' resilience at a time when loan losses were low, and the case for cutting it was also considered.

After last month's Monetary Policy Committee (MPC) meeting, the BoE kept interest rates on hold for the first time since it began its tightening cycle in December 2021, leaving its main Bank Rate at 5.25%.

Earlier on Tuesday, the International Monetary Fund downgraded its growth forecasts for Britain for this year and next, predicting growth of just 0.6% in 2024, the weakest of any major advanced economy.

(Reporting by David Milliken and Huw Jones)

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