BoE to raise the required capital buffer for UK banks to 1% in Nov - BBH

In an important development today, the Bank of England's announced that it will raise the required capital buffer for UK banks from 0.5% now and to 1.0% in November.  

Key Quotes

“Banks will have a year to build the initial buffer (~GBP5.7 bln) and 18 months for the second part.  Recall the counter-cyclical buffer was introduced in March 2016 but was lowered to zero following the referendum.”

“The reintroduction of the capital buffer follows recent conflicting signals by the MPC.  The vote earlier this month was a 5-3 decision to leave rates on hold.  Within days, Governor Carney said that now was not the time to raise rates.  This was quickly followed by the BOE's chief economist revealing he was close to voting for a hike.  This had already put the proverbial cat among the pigeons.”

“The question now is whether the removal of accommodation by the FPC is sufficient or whether the MPC will still resist Carney's suggestion.  The June and December short sterling futures contracts are little changed, though some economists are bound to change their view and call for an August hike.  Sterling rallied a little more than a quarter cent on the news but met strong sellers near $1.2770.  The 20-dya moving average is near $1.2790, and last week's high was $1.2815.”