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26 Jun 2013
BoE: UK economy threatened by weak global recovery
FXstreet.com (Barcelona) - The Bank of England released its half-yearly Financial Stability Report on Wednesday, in which it warnes borrowers and financial institutions against the risk of a sharp rise in interest rates. The uncertain situation in the Eurozone could also weigh on the outlook for the UK economy.
According to the report in the short term “risks could crystallize if global long-term interest rates were to rise abruptly from current still historically low levels, or if credit spreads were to widen.” In the longer term “risks could accumulate if a search for yield intensifies and assets become progressively mispriced.”
Therefore, the BoE asked the UK financial sector supervisors to assess banks' vulnerability to elevated interest rates. Findings are to be presented in September. The central bank also recommended to reinforce the UK financial system against cyber attacks, which are “increasingly frequent and sophisticated.”
According to the report in the short term “risks could crystallize if global long-term interest rates were to rise abruptly from current still historically low levels, or if credit spreads were to widen.” In the longer term “risks could accumulate if a search for yield intensifies and assets become progressively mispriced.”
Therefore, the BoE asked the UK financial sector supervisors to assess banks' vulnerability to elevated interest rates. Findings are to be presented in September. The central bank also recommended to reinforce the UK financial system against cyber attacks, which are “increasingly frequent and sophisticated.”