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L Mann - Policy spillovers when external shocks persist and domestic activity diverges

Catherine L. Mann discusses why international spillovers matters. She highlights how different economic outlooks are leading monetary policies to diverge. She discusses what this means for her monetary policy strategy.

In her speech, Catherine L Mann discusses the significant and persistent global shocks that have impacted monetary policy across different regions, particularly focusing on the UK, US, and euro area. Highlighting the differences in inflation dynamics and economic growth, Mann points out that financial markets expect a downward direction for interest rates due to weakening growth prospects. However, she underscores that the UK's higher and stickier services inflation presents a structural challenge, particularly due to higher wage growth driven by past inflation and subdued productivity growth. This scenario suggests that the Bank of England may face more prolonged inflation above its target. Mann also emphasizes that international spillovers will play a crucial role, especially in determining the impacts on exchange rates and bond yields. She ends by highlighting the complexities faced by policymakers in small open economies in managing both domestic and international influences.

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Positivity: 40
Uncertainty: 80

Evans - A balanced approach to finishing Basel 3.1 in the UK

The Prudential Regulation Authority has published its near-final Basel 3.1 rules. In this speech, Phil explains why the package of reforms is needed. He also describes the balanced approach the PRA has taken to making substantive changes to some of the biggest issues from the consultation paper, based on feedback from firms. Overall, the package supports the UK’s growth and competitiveness, the resilience of the banking system, and alignment with global standards.


Phil Evans' speech provides critical insights into the Basel 3.1 reforms, particularly their aim to better capture risk so that firms maintain appropriate capital levels. The speech emphasizes a balanced approach, ensuring neither too little nor too much capital is held. Significantly, the reforms will impact various areas, including SME and infrastructure lending, and off-balance sheet items. The Prudential Regulation Authority (PRA) has adjusted its proposals based on extensive consultation feedback, ensuring they meet criteria for risk sensitivity and international alignment while addressing competitiveness and growth. The implementation of these reforms will be phased in over four years starting January 2026, reflecting the PRA's commitment to a thorough, evidence-based process.

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- Positivity: 80
- Uncertainty: 40

Barr - The Next Steps on Capital

Vice Chair for Supervision Michael S. Barr's speech discussed the importance of bank capital requirements in maintaining financial stability and the balance between ensuring bank resilience and keeping lending affordable. The speech emphasized upcoming changes to the Basel III endgame proposal and the capital surcharge for global systemically important banks (G-SIBs). Barr highlighted that stakeholder feedback has led to significant modifications aimed at balancing resilience with efficiency. The proposed changes are expected to increase capital requirements for G-SIBs by 9 percent, with other large banks also seeing smaller increases. Furthermore, he addressed adjustments for operational risk, market risk, and tiering to ensure the new framework better reflects the intricacies of bank activities. Barr also stressed the openness to further comments and the need for continual updates to reflect economic growth and inflation.

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Positivity: 70
Uncertainty: 40

Breeden - Financial stability at your service

In these remarks – published alongside a companion article by Bank staff – Sarah Breeden talks about the Bank’s work on financial stability. She makes the case for policymakers to focus on the provision of vital services, which requires a better understanding of the dynamics of the system not just a focus on individual institutions. She also talks about the relationship between financial stability and economic growth.

Sarah Breeden’s speech provides a comprehensive overview of how the Bank of England approaches financial stability, emphasizing its dual objectives of price stability and financial stability. The Bank defines financial stability as the maintenance of vital financial services to households and businesses, even when faced with shocks. The speech discusses the necessity of addressing externalities and systemic risks through macroprudential policies, something the Financial Policy Committee (FPC) actively engages in. Breeden highlights the importance of prioritizing systemic risks and utilizing tools like the System-Wide Exploratory Scenario (SWES) to model and understand interactions within the financial system. The speech also underscores the importance of ensuring the provision of financial services in bad times, rather than trying to expand them in good times, and stresses the value of resilience against severe but plausible shocks. Additionally, systemic thinking is presented as a crucial component, one that can lead to different policy responses compared to microprudential perspectives. Lastly, the speech posits that resilience in the financial system is fundamental for sustainable economic growth and that financial stability must always be "at your service" to households and businesses.

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**Positivity: 70**
**Uncertainty: 60**