“Given the impact of rising interest rates and the uncertainties associated with inflation and growth, some valuations of risk assets appear overstated,” he added.
The FPC judged that British banks and the broader financial system remained resilient, and kept banks’ countercyclical capital buffer (CCyB) – a risk management tool – unchanged at 2%.
“The FPC will continue to closely monitor developments in the situation and is prepared to modify the UK CCyB rate, in any direction, depending on the evolution of economic and financial conditions,” it stated.
Some FPC members argued for an increase in the rate, to bolster banks’ resilience at a time when loan losses were low, and arguments in favor of cutting it were also considered, the BoE said.
Following last month’s meeting of its Monetary Policy Committee (MPC), the Bank of England left 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 lowered its forecasts for Britain next year, forecasting growth of just 0.6% in 2024, the weakest of any major industrial economy.