Meeting minutes - December 2022
Updated 6 October 2023
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0.1 Record of the meeting between the Governor of the Bank of England and the Chancellor of the Exchequer to discuss the Financial Stability Report (published on 13 December 2022).
1) On 14 December 2022, the Governor and Chancellor discussed the Financial Policy Committee’s judgements on the outlook for UK financial stability, as set out in the December 2022 Financial Stability Report (FSR).
2) The Governor noted that while global economic conditions have deteriorated and household and businesses finances are under growing pressure from higher inflation and borrowing costs, the UK banking system remained strong, and is able to continue meeting the credit needs of households and businesses, even if economic conditions were to be worse than currently forecast.
3) The Governor further noted the recent dysfunction in the market for long-dated UK Government debt highlighted previously identified vulnerabilities in the non-bank financial system, particularly in liability-driven investment (LDI) funds. The Governor also noted that the FPC has recommended that the Pensions Regulator take action to ensure that LDI funds remain resilient to the higher level of interest rates that they can now withstand and defined benefit pension scheme trustees and advisers ensure these levels are met in their LDI arrangements.
4) The Governor and the Chancellor agreed to continue to co-operate closely across the authorities to ensure the resilience of the financial system.