FPC record of March meeting

The Bank of England (BoE) has published the record of the Financial Policy Committee's (FPC) meeting held on 27 March to identify risks to financial stability and agree policy actions aimed at safeguarding the resilience of the UK financial system. The FPC assesses that the conflict in the Middle East has triggered a substantial negative supply shock, leading to significant market moves (including higher and more volatile energy prices and higher government bond yields). While the financial system has been resilient so far, the shock is expected to weigh on growth, increase inflation and tighten financial conditions. The FPC highlights that these developments could interact with existing vulnerabilities it has previously identified in sovereign debt markets, risky asset valuations and risky credit markets (notably private credit), increasing the likelihood that multiple vulnerabilities could crystallise at the same time and amplify risks to financial stability. The FPC emphasises the need for timely and active risk management by market participants, including stress testing and liquidity preparedness that incorporate scenarios involving further sudden and significant price adjustments.

The FPC reiterates its support for the private markets system wide exploratory scenario (which will explore potential risks and dynamics associated with private markets and related risky public credit markets) and maintained its judgement that the UK banking system has the capacity to support households and businesses even if conditions were substantially worse than expected. It also decided to maintain the UK countercyclical capital buffer rate at 2%. The FPC will provide an update on progress and next steps in its assessment of the overall level of capital requirements in the UK banking system in the July 2026 Financial Stability Report. This follows feedback received since its assessment of bank capital requirements published in December 2025.

The FPC also assessed evidence on financial stability risks from the use of AI, concluding that more advanced AI (such as generative or agentic AI) has not yet been adopted in a way that would present systemic risk but that risks could increase as firms intend to expand deployment. The FPC supports ongoing monitoring by the BoE and the FCA and has requested further work on agentic AI focused on use cases in payments and financial markets.

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