Bank of EnglandOct 20 2022

Energy price guarantee may push rates higher, BoE says

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Energy price guarantee may push rates higher, BoE says
AP Photo/Alberto Pezzali

This included no economic forecast from the Office for Budget Responsibility, which was widely credited as contributing to the negative market reaction.

Cunliffe said the BoE is normally given the OBR costings, which it takes into account in its rate setting meetings.

“Yields had been moving up [generally] against the background of rising rates up until September,” Cunliffe said.

“When you look at what happened after the 23rd [the day of the “mini” Budget], there is in my view clearly a UK component.”

Call in powers

Cunliffe also warned that potential “call in powers” from the regulators could hamper growth in the UK.

City minister Andrew Griffith recently told the Treasury committee that the government was committed to these powers, which would see parliament able to “call in” decisions by the regulators if it was in the public interest to do so.

This could potentially pit the Bank of England against parliament.

Cunliffe said the financial services and markets bill, in which the call-in powers were originally included, then excluded, is welcomed.

The bill repeals EU rules over the financial services industry in the UK and gives the FCA greater responsibility to set requirements for financial servies companies.

“The bill give us flexibility…but that needs to be underpinned by strong regulatory framework and independent regulators and that is best practice in most advanced economies,” Cunliffe said.

But any powers to change decisions could result in the UK’s financial services sector being eschewed by foreign companies, he said.

“Other jurisdictions will not be assured that their firms can use our financial infrastructure and services unless they are assured that our framework is credible and they are not importing risk into their jurisdictions.”