Goldman Sachs said: “We expect the BoE to reverse its 0.5pc cut in the CCyB rate for UK exposures of banks at its June FPC meeting, and to recommend banks maintain credit quality of new lending, which could slow unsecured lending growth.”
That will have the combined effect of making banks store up that capital for a rainy day, and also reducing the pace of lending in areas such as credit cards. However, the Bank is still cautious because it does not want to force banks to slash lending as that could damage the economy.
“In all of this, there will be a very careful approach where, whether it is the CCyB, regulating different parts of consumer credit more tightly, potentially raising interest rates, or ending the term funding scheme early – these are all possible approaches, but they are not going to do them all at once,” said analyst John Wraith at UBS. “I think the approach will be to try to tiptoe into reversing some of the policies that have been put in place for earlier, harder times, and then sit back to judge what impact it has.”