BoE reportedly plans to ease banks' capital requirements on Brexit

The Bank of England is said to be planning cuts to bank’s capital requirements as early as next week.

According to sources cited by Bloomberg, the central bank’s Financial Policy Committee is looking to reverse a decision taken in March to raise the counter-cyclical capital buffer for UK exposures to 0.5% of risk-weighted assets from zero to help lenders withstand the fallout from the vote to leave the European Union.

That increase, which was meant to become binding from 29 March 2017, was designed to guard against the cycle of banks boosting lending in good times and slashing credit in a downturn.

It was understood that Tuesday’s FPC meeting was dominated by discussions about the stability implications of Brexit. Officials are due to release a statement alongside their bi-annual Financial Stability Report on 5 July, while Bank of England governor Mark Carney will host a press conference that day.

On Thursday, Carney said the FPC will “take any further actions it deems appropriate to support financial stability”.

He suggested the central bank would implement further interest rate cuts over the summer to support the economy after the Brexit vote, noting that the economic outlook had deteriorated.

"The Committee will make an initial assessment on 14 July, and a full assessment complete with a new forecast will follow in the August Inflation Report," Carney said.

"In August, we will also discuss further the range of instruments at our disposal.”