Carney Q&A Con't.: Q: Should climate change.....>

BOE: Carney Q&A Con't.: Q: Should climate change come under MPC's assessments

with respect to interest rates?

- A: Climate change issues are public policy issues and government issues.

Responsibility for Bank is to be ready for any issues as they occur. Policy

could feed through to inflationary pressures, forecast horizons, which would be

relevant for monetary policy (although notes  by this stage it may be too late).

- Q: Mortgage market very competitive so recent rate hikes haven't fed through.

Does this lessen impact of interest rates?

- A: What we need to do is not rely on old models of relationship between base

rate and mortgage rates. One big shift has been shift from floating rate to

predominantly fixed rate market in UK. That changes transmission mechanism (less

immediate impact) as does funding models for banks. Bank have been flagging

wholesale funding is diminishing as source of funding in favour of deposit

funding and sight deposits. Value of bank deposits now exceeds loans in many

circumstances. In terms of transmission mechanism, that remains similar, don't

think there's been significant change in "potency of policy".