The FPC met on 4 and 8 April to consider the uncertainties caused by deterioration in the global risk environment. Its headline conclusions are that:
- severe shocks are more likely and the growth outlook has weakened;
- the risk of further sharp falls in market prices is still high;
- UK households and businesses remain resilient; and
- the UK banking system is strong enough to support households and businesses even in stressed conditions.
It has seen sharp declines in some asset prices and an intensification of risks associated with fragmentation of global trades and markets. The announcement of the US tariffs has caused significant falls in many financial instruments and a rise in market volatility, but market functioning remained orderly.
Financial regulation is also under the spotlight for its need to support stability while being resilient to support growth and competitiveness. The FPC is pleased with the FCA and PRA work on private market valuation prices and private equity related financing and agrees more work is needed to assess and if necessary address risks the private markets pose.
The CCyB is still 2% but it under monitoring.
Other matters discussed included:
- assessment of the risks of various jurisdictions introducing stablecoins;
- the need to monitor AI-related risks;
- the need for the FPC response to the Chancellor’s request for identification of areas where the financial system can contribute to growth to focus on long-term productivity growth;
- the plan to move to T+1 settlement in UK markets by October 2027;
- the reform of the commodity derivatives framework; and
- the life insurance stress test.
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