The Bank of England cautioned that valuations for certain financial assets, particularly US tech stocks and dollar-denominated corporate bonds, might be overly high. "The overall risk environment continues to be challenging and near-term growth prospects remain subdued," the BoE's Financial Policy Committee (FPC) said after a quarterly meeting.
"Given the impact of higher interest rates, and uncertainties associated with inflation and growth, some risky asset valuations appear to be stretched," it added.
The Financial Policy Committee (FPC) determined that the banks and the broader financial system in the UK continued to display resilience. They opted to maintain the banks' counter-cyclical capital buffer (CCyB) at its current level of 2%.
While some FPC members advocated for an increase in the rate to enhance the banks' resilience, given the low levels of loan losses, the possibility of reducing it was also deliberated, as reported by the Bank of England.