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☆ Goldman taps former BoE official Bradley Fried as next International chair- Sky News
▼ + stars: | 2022-12-17 | by ( ) www.reuters.com time to read: 1 min

Dec 17 (Reuters) - Goldman Sachs Inc (GS.N) has tapped Bradley Fried, former Chair of the Court of the Bank of England, as chairman of Goldman Sachs International (GSI), Sky News reported on Saturday. Fried will replace Jose Manuel Barroso, who was the former European Commission president, according to the report. The announcement is expected next week and Fried will assume his role in February next year, the report said. Goldman Sachs declined to comment when contacted by Reuters. Fried stepped down as the Chair of BoE's Court last June after 4 years with the central bank.

While governments worldwide are grappling with high inflation and low growth, UK policymakers are still rebuilding fiscal and political credibility following the brief, chaotic premiership of Liz Truss. Worries about growth are leading some investors to limit their holdings of the pound and British debt. Reuters GraphicsForeign investors have traditionally been attracted by Britain's strong rule of law, stable governance and thriving financial and professional services sector. In the latest data, up to the second quarter of this year, FDI represented more than half the net outflow - a result of strong UK investment abroad but weak inward investment too. Stephen Welton, executive chairman of major growth capital investor BGF, said attracting foreign investment was like a global competitive sport - one that Britain had previously excelled at.

Commercial banks are paid interest on the reserves by the BoE at whatever is the BoE's current interest rate - just 0.1% a year ago, but 3% now and likely to rise further. But now the BoE makes losses because the interest paid on reserves exceeds income from its QE bond holdings. Bailey said the current structure of paying interest fully on all reserves was the simplest way for the BoE to ensure its interest rate changes are transmitted through the financial system. He disagreed with descriptions that this was free money for banks, since they had their own funding costs to meet that also rose with central bank interest rates. Another former BoE rate-setter, Gertjan Vlieghe, on Thursday said it would be a "disaster" to stop paying interest on reserves, even partially - akin to a default on debt.

LONDON, Nov 24 (Reuters) - The Bank of England will not accept interference with the system of paying interest to banks from reserves issued by the central bank, BoE Chief Economist Huw Pill said on Thursday, pushing back against talk that change is needed. Some former BoE officials have said the central bank should alter its system of paying interest to banks on its 950 billion pounds ($1.15 trillion) of reserves, the vast majority of which the BoE issued to finance its quantitative easing programme. Pill's comments are likely to be interpreted as a warning to the government, which ultimately decides how interest on reserves are paid. Commercial banks are paid interest on the reserves by the BoE at whatever is the BoE's current interest rate - just 0.1% a year ago, but 3% now and likely to rise further. However, another former BoE rate-setter, Gertjan Vlieghe, said on Thursday it would be a "disaster" to stop paying interest on reserves, even partially - citing recent concerns about Britain's institutional credibility.

☆ Bank of England projects more than 30 bln pounds of annual QE losses
▼ + stars: | 2022-11-22 | by ( David Milliken | ) www.reuters.com time to read: +2 min

LONDON, Nov 22 (Reuters) - Britain's government may need to pay the Bank of England more than 30 billion pounds ($36 billion) next year and also in 2024 to cover losses on its quantitative easing (QE) programme, a report released by the central bank on Tuesday showed. The BoE started buying government bonds in 2009 and the size of the QE programme peaked at 895 billion pounds in December 2021, including 20 billion pounds of corporate bonds. Under terms agreed at the start, Britain's finance ministry receives any profits from QE - but must compensate the BoE for any losses. Last month, Britain's finance ministry paid the BoE 828 million pounds to cover QE losses. Looking out to 2033, the cumulative net loss on the QE programme could range from less than 50 billion pounds to almost 200 billion pounds, depending on the path of interest rates, the projections showed.

☆ UK taxpayers on hook for 133 billion-pound bill to cover BoE losses
▼ + stars: | 2022-11-17 | by ( ) www.reuters.com time to read: +2 min

[1/2] A general view of the Bank of England (BoE) building, the BoE confirmed to raise interest rates to 1.75%, in London, Britain, August 4, 2022. Until recently, the government received profits made by the BoE's QE programme when interest rates were low, which totalled 120 billion pounds between March 2009 and March 2022. "Across the forecast, the Treasury pays 133 billion pounds (to the BoE) to cover these losses, more than reversing the previous 13 years' gains," the Office for Budget Responsibility said in its latest forecast. It said this figure was sensitive to both changes in the BoE's Bank Rate and gilt prices, meaning the true figure could be much higher or much lower. BoE Governor Andrew Bailey has said doing so would weaken the central bank's transmission of monetary policy via the banking system.

☆ UK should consider interest cut on banks' BoE reserves - former deputy governor
▼ + stars: | 2022-11-01 | by ( ) www.reuters.com time to read: +2 min

LONDON, Nov 1 (Reuters) - Britain should consider changing the Bank of England's policy of paying interest to banks on the reserves they hold there, former BoE deputy governor Charlie Bean said on Tuesday. Banks are paid interest on the reserves at whatever is the BoE's current interest rate - just 0.1% a year ago, but 2.25% now and set to rise further. Those flows have reversed: now the government foots the bill for any losses the BoE makes as it pays higher interest on bank reserves issued for its QE programme. BoE Governor Andrew Bailey has said the current system is essential to transmit changes in the BoE's official interest rate through to the wider economy. However Tucker, who was deputy governor from 2009 to 2013 and is now a researcher at Harvard University, said similar effects could be achieved by paying interest on just 100 billion pounds of reserves.

☆ Bank of England bond stockpile incurs first loss for UK public finances
▼ + stars: | 2022-10-21 | by ( ) www.reuters.com time to read: +2 min

LONDON, Oct 21 (Reuters) - The Bank of England's stockpile of government bonds has incurred the first loss for the public finances since the central bank launched its quantitative easing programme in 2009, data showed on Friday. The British Treasury indemnifies the BoE for its bond portfolio which until now has generated profits for the public finances. British banks hold around 950 billion pounds of reserves at the BoE, largely as a result of the 838 billion pounds of QE purchases that the central bank has yet to reverse. The BoE said earlier this year that it had transferred a total of 120 billion pounds to the Treasury in profits from QE since it began buying bonds in 2009. ($1 = 0.8984 pounds)Register now for FREE unlimited access to Reuters.com RegisterWriting by William Schomberg; Editing by Hugh LawsonOur Standards: The Thomson Reuters Trust Principles.

☆ Former BoE, BoC Governor Carney: UK crisis shows risk of policies at cross purposes
▼ + stars: | 2022-10-20 | by ( Julie Gordon | ) www.reuters.com time to read: +2 min

OTTAWA, Oct 20 (Reuters) - The political crisis in the UK shows the importance of fiscal and monetary policies not working at cross purposes, particularly in the current economic environment, said former Bank of England Governor Mark Carney on Thursday. "The UK experience underscores that it's counterproductive for fiscal and monetary policies to work at cross purposes," he told a Canadian Senate committee. "Colloquially, if one foot is on the brake, and that's monetary policy," then the other should not "stomp on the gas." "One of the lessons is that sound monetary and credible fiscal policy will be rewarded, but mistakes will be punished," Carney said. Carney, Bank of England Governor from 2013 to 2020 and Governor of the Bank of Canada from 2008 to 2013, noted the importance of an independent central bank, along with inclusive policy, saying the UK tax cuts mostly benefited the wealthy.

☆ Factbox: Windfall taxes, spending cuts on table as Hunt tries to fix UK budget
▼ + stars: | 2022-10-19 | by ( ) www.reuters.com time to read: +4 min

LONDON, Oct 19 (Reuters) - Britain's latest finance minister Jeremy Hunt needs to raise an estimated 40 billion pounds ($45 billion) to repair public finances. British banks hold around 947 billion pounds of reserves at the BoE, largely as a result of quantitative easing that the central bank is yet to reverse. Cost estimates for completing HS2 soared to 100 billion pounds before the Leeds link was removed. The change represented a saving of 3.5 billion pounds in its first year in 2021. Asked on Oct. 19 about the foreign aid budget, Truss said more details would be set out in due course.

"It is really not the right time to experiment with fiscal policy," AXA chief economist Gilles Moec said about the UK's moves, assessing that Monday's U-turn may have appeased "the bond vigilantes for now". The term, bond vigilantes, refers to debt investors imposing fiscal discipline on profligate governments by forcing their borrowing costs higher. Ed Yardeni, who coined the bond vigilantes term in the early 1980s, penned a blog post saying "They're Baaaack!" Even U.S. President Joe Biden was speaking the bond vigilante's language at the weekend, noting he wasn't the only one that thought the UK plan was a "mistake". "This is probably the biggest example in practice of the bond vigilantes activity," said Antonio Cavarero, head of investments at Generali Insurance Asset Management.

☆ UK's Kwarteng heads for Washington under pressure from IMF
▼ + stars: | 2022-10-10 | by ( William Schomberg | ) www.reuters.com time to read: +4 min

On Sept. 23, Kwarteng made his first fiscal announcement including a controversial plan to scrap Britain's top income tax rate for the highest earners, part of a package of measures he said would speed up sluggish economic growth. Last week, a rebellion within the ruling Conservative Party forced Kwarteng and Truss to drop the idea of scrapping the 45% top rate of tax. "If Kwarteng decides to lecture back, let alone publicly dissent from the G7 consensus, then things will go very badly for him," Posen, a former BoE rate-setter, said. The BoE said on Monday it was taking further steps to ensure the emergency bond-buying scheme concludes smoothly on Friday. Register now for FREE unlimited access to Reuters.com RegisterAdditional reporting by Howard Schneider in Washington Writing by William Schomberg Editing by Catherine EvansOur Standards: The Thomson Reuters Trust Principles.

LONDON, Sept 29 (Reuters) - British Prime Minister Liz Truss broke her silence on Thursday following nearly a week of chaos in financial markets triggered by her plans for tax cuts, saying she was willing to take "controversial" decisions to reignite growth. Register now for FREE unlimited access to Reuters.com Register"But I'm prepared to do that as prime minister because what's important to me is that we get our economy moving." Truss became prime minister on Sept. 6 after winning the leadership of the governing Conservative Party with promises to cut taxes. "This is the right plan that we've set out," Truss said, adding it would put Britain's economy on a better trajectory for the long term. Some financial analysts have said the government might have to bring forward that announcement to settle the nerves of investors.

The Fed's relentless interest rate-raising campaign, and resulting worldwide surge in the dollar, is tightening global financial conditions at an alarming pace. Many feel this should put global financial leaders on the highest contagion alert. China's central bank has asked major state-owned banks to be prepared to sell dollars overseas to stem the yuan's descent. chartchartEINSTEIN & INSANITYThere are signs that the recent global market turmoil is opening eyes in Washington. Perhaps surprisingly then, the last time G7 central banks acted together in FX was in 2001, selling yen for dollars.

☆ Former BoE deputy governor Bean: Emergency bank meeting may have made sense
▼ + stars: | 2022-09-27 | by ( ) www.reuters.com time to read: 1 min

City workers walk past the Bank of England in the City of London, Britain, March 29, 2016. REUTERS/Toby Melville/LONDON, Sept 27 (Reuters) - Former Bank of England Deputy Governor Charlie Bean said he would likely have advised the central bank to call an emergency meeting following market turmoil this week, and that the lesson of emergency interventions was "you go big, and you go fast". "On this occasion if I had still been at the bank in my role as deputy governor I certainly would have been counselling the governor that I think this is one of those occasions where it might have made sense (to call a meeting)," he told BBC radio. "The key thing is, if you call it, you have to take significant action." Register now for FREE unlimited access to Reuters.com RegisterReporting by Kylie MacLellan, writing by William JamesOur Standards: The Thomson Reuters Trust Principles.

☆ Boeing to pay $200 million to settle civil charges it misled investors about 737 MAX
▼ + stars: | 2022-09-22 | by ( ) www.reuters.com time to read: +1 min

Grounded Boeing 737 MAX aircraft are seen parked at Grant County International Airport in Moses Lake, Washington, U.S. November 17, 2020. REUTERS/Lindsey WassonSept 22 (Reuters) - Boeing (BA.N) will pay $200 Million to settle charges from the U.S. Securities and Exchange Commission that it misled investors about the 737 MAX that was grounded for 20 months after two fatal crashes killed 346 people. The SEC also said former Boeing Chief Executive Dennis Muilenburg had agreed to pay $1 million. The Boeing Company and its former CEO, Dennis Muilenburg, failed in this most basic obligation," SEC Chair Gary Gensler said. Register now for FREE unlimited access to Reuters.com RegisterReporting by David Shepardson, Editing by Franklin PaulOur Standards: The Thomson Reuters Trust Principles.

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