Bank of England Doesn’t Have Final Say on Help to Buy

Mark Carney, the governor of the Bank of England, has insisted Threadneedle Street does not hold a veto over George Osborne’s controversial Help to Buy policy should the scheme jeopardise financial stability.

The chancellor announced in October that the Bank would be asked to review the taxpayer-backed mortgage support scheme yearly, amid growing fears it could inflate an unsustainable housing bubble.

But in a letter to Treasury select committee chairman Andrew Tyrie, published on Thursday, Carney makes clear that while the Bank’s financial policy committee (FPC) could advise the government at any time if Help to Buy is putting financial stability at risk, the final decision about if it should continue will lie with the Treasury.

“The FPC has no power to require the Treasury to vary the terms of, or close, the Help to Buy scheme,” Carney writes in reply to a letter from Tyrie earlier this month asking him to clarify the Bank’s role. “The FPC only has the authority to make recommendations in connection with such matters … the FPC is not constrained by the government’s timetable for any such advice; it could make recommendations at any time.”

via The Guardian

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza