Carney has now finished so here are some of the key points.

In the wake of criticisms from various politicians, he said investors would want a “risk premium” to buy UK assets if the Bank’s independence was questioned. But markets should not expect this to happen. It was up to the government to set a target for price stability which the Bank would then decide how to reach.

On his own future, he said it would be a personal decision as to when he would step down from the Bank and not related to politics.

Sterling’s recent slump had less to do with monetary policy, he said, and more to do with the announcement of the timetable for Article 50 and the market’s perception of how discussions on Brexit would unfold.

He said there were various contingency plans in place for banks to leave London if they saw fit.

On QE he expressed sympathy for savers who have been hit by the programme, but said the Bank was not slavishly relying on QE.

He defended the Bank’s purchase of corporate bonds, including McDonald’s.

On negative rates, he said there was something unnatural and a confidence effect.

Meanwhile the pound has recovered some ground after its earlier sudden slump, which was blamed variously on the strong dollar, comments from chancellor Philip Hammond suggesting more QE and nervousness ahead of Carney’s appearance at the House of Lords.

It is now down 0.3% at $1.2195 after falling as low as $1.2084 - its worst level since the flash crash earlier this month. Its recovery is partly due to Carney’s measured performance and his attempts to reassure on QE, his own future, and worries over the Bank’s independence.

With the slight recovery in the pound, the FTSE 100 has lost much of its earlier gains but still ended up 0.45% at 7017.64.

On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow.

Over to Greece, and the White House has confirmed that president Barack Obama will be visiting the country in November in what officials hope will be the biggest push yet to secure debt relief for the country. Our correspondent Helena Smith reports.

Barely days after the race for the White House, the outgoing president will visit Athens on November 15 in what was described as a tour aimed at reaffirming support “for economic reforms that reduce inequality.”

The US president has voiced barely disguised frustration with austerity policies he has blamed for economic stagnation and slow growth in Europe. Greek officials in the leftist-led government are hoping Obama will push for debt forgiveness when he goes on to hold talks with the German chancellor Angela Merkel in Berlin so that the Greek economy, currently locked in its worst slump in modern times, can be put on the path to recovery.

The IMF, like Washington, both believe that with a debt load in excess of €300bn the Greek economy is unsustainable. Prime minister Alexis Tsipras has recently racheted up the rhetoric, saying a debt deal should be wrapped up by December when Athens completes a second review of the economy with international inspectors representing its bailout creditors at the EU and IMF. His appeals were rebuffed by both Merkel and her French counterpart when he met them on the sidelines of last week’s EU summit in Brussels. Berlin, the main provider of bailout funds to date, has argued that Greece’s problen is not one of debt but competitiveness.

Still with Brexit, and Ireland is making a pitch to provide a home for a key regultor. Jill Treanor writes:

It is not so long ago that European Banking Authority moved to new offices in London’s Canary Wharf. But the vote for Brexit means the regulator which oversees banks in the remaining 27 countries of the EU is likely to need a new home. Ireland has now made a formal pitch to take on the regulator, best known for conducting its stress tests on banks. Michael Noonan, minister of finance said: “While the UK continues to be a full member of the EU until the negotiations for their exit have been completed, preparations must be made for eventualities such as the relocation of certain European agencies such as the European Banking Authority. Ireland has a significant financial services sector, efficient transport links to other European capitals and the capacity to absorb the European Banking Authority’s re-location to Ireland. Our interest in hosting the EBA demonstrates the continued importance Ireland places in well regulated financial services. As a country with experience in providing links to banks and companies in the UK market, Ireland provides an ideal new home for the staff of the EBA.”

Ireland has made no secret of its ambitions to take any exiles from London’s financial services sector.

Lord Hollick ends by saying a question has been sent in during the proceedings by a pensioner who wants to know what he should invest his savings in.

Carney replies that when he can have the answer sent in, he will give a reply.

And with that, it’s over.

Question: Why are you opposed to negative interest rates? Do you feel comfortable with size of derivatives on bank bal sheets

Carney says on negative rates, uncomfortable with effect on bank balance sheets and lending possibly being tempered or reversed. In UK the building societies are an important part of system and they don’t have alternative supply of finance.

On top of that, there is something unnatural to negative rates to some people and there is a confidence effect.

In terms of derivatives, reforms put in place have substantially reduced risks.

Question: If the MPC had known about fall in sterling in August would they have done same stimulus measures ? When does depreciation start becoming serious?

Carney says committee always takes into account exchange rate movements and the reasons, and its effect on inflation.

Prior to referendum, the way we talked remained most appropriate - we have to balance supply, demand and exchange rate.

Since timing of Article 50 became clear, sterling has been influence by market perceptions of [future with EU].

If exchange rate has depreciated and UK supply capacity is weakened by Brexit, it will push up inflation.

Question: What is concerning central bankers at the moment other than Brexit?

Carney says the balance of monetary, fiscal and structural policy, and that monetary policy has been overburdened. Fair bit of time needs to be spent on that.

In terms of biggest risk, China. It is going through a series of transitions, manufacturing to services, from bank based lending to market based finance, flexibility of exchange rate. They are all happening simultaneously. Chinese authorities have done an exemplary job in managing this, but there are challenges.

In recent years the pace of growth has been faster than the speed limit, effectively a product of debt through shadow banking sector. Challenge is to sustainably and safely decelerate the rate of growth.

Question: when will the recent fall in sterling affect inflation?

Carney says the recent uptick in inflation is the product of a few factors but not, net, sterling. Mainly energy prices and clothing prices.

Relatively quickly we will see the effects of the sterling depreciation. By the spring [inflation will be] 1.5% to 1.8% annualised with an important contribution [from currency].

We do not have a target for the exchange rate. But it is a factor which influences the stance of monetary policy, and will take into account over next week as we make our policy decision.

Question: Given government can borrow at low rates and investing, shouldn’t they take advantage of that?

Carney says have to be careful in fiscal policy about what is temporary and what is baked in system. I agree, given interest rate, relative return on a project doesn’t have to be that high when there is tax revenues and an asset alongside it. But those decisions are decisions of the government.

Question: Is monetary policy now too loose and fiscal policy too tight?

Carney says adjusting fiscal policy is much slower than adjusting monetary policy, it needs budget, legislation.

So there is a need to understand the fiscal policy of the government and take it into account. Appropriate for chancellor and governor to discuss how the economy is and what should be done.

Away from Carney and back to the pound’s slide. Neil Wilson, markets analyst at ETX Capital said:

There is no clear reason for the dip but once the run on the pound starts these days it’s hard to find buyers at any natural or obvious levels...It just goes to show how bearish the sentiment is around the pound at the moment. It doesn’t take a lot to send sterling south at the moment.

Of course it’s good news for all those dollar earners on the FTSE 100, which rallied strongly on the pound’s fall before a big bought of profit taking around 15:20-30 pared the day’s gains.

Question: Is there too much uncertainty now for forward guidance to be useful?

Carney says it is useful in certain circumstances, in the exit from unconventional policy.

Lamont: Why are you now buying corporate bonds?

Carney says this provides a different channel of stimulus. It is more powerful pound for pound than QE. We are buying neutrally, companies important to UK economy.

[Lamot: McDonald’s?] Yes, it is part of the UK economy, providing jobs.

It encourages issuance in that market, also frees up bank balance sheets to lend to smaller businesses and households.

Question: is there anything to be done to make sure the City remains the pre-eminent financial centre post-Brexit?

We start from a position where it is Europe’s financial centre.

[On euro clearing moving from London] there is no need for currency clearing to take place in the currency’s jurisdiction. It is broader discussion in the political realm.

From our point of view, we need to retain world class supervision and regulation. We need to ensure - issue for government and private sector - that non-euro activity continues to grow in London.

We need to come to some sort of broader agreement on aspects of wholesale finance.

Yes some business would migrate, but City will grow other business from elsewhere.

Carney says he expects the EU to give serious consideration to equivalence of UK financial regulation.

Carney says we do not want to have our hands tied to import ad infinitum financial rules made elsewhere.

The pound has recovered some ground during the course of Carney’s appearance so far. Having fallen as low as $1.2084 earlier, and recovering to $1.2121 as he began, it is now at $1.2135, still down 0.7% on the day.

Question: is BBA irresponsible suggesting banks are ready to leave imminently?

There is much uncertainty, and in an environment where profitability is stretched. Some may take decisions earlier than others.

There are discussions [to be held with the EU], it would be precipitate to make decisions [before then].

Question: any evidence banks are planning to relocate out of London?

Carney says as supervisor of banks, we are aware of contingency plans at various stages of readyness. Some would be in a position to adjust activities within the next year if they saw fit.

Question: US rates are expected to rise, does that not depress the pound. The Bank has also failed to meet its inflation target.

Carney says there were four elements to August’s package, sterling barely moved, the market understood what we were doing.

When does sterling move, asks Carney. When it becomes clear on the timing of Article 50 and the market’s perception on the relationship between UK and EU. It’s a bit early to determine that. PM says she will get best deal, there have been no discussions.

But the market’s perception influences a perception of the supply situation of the econmy. That perception may well be mistaken.

We have to take account of where sterling is and how persistent it will be.

The 6.5% movement in currency since the Conservative party conference has largely been driven by a single factor, not monetary policy.

As for US, there has been an increased perception that Fed will raise rates by the end of the year. That has contributed to generalised dollar strength.

But with sterling it is more the perception of that fundamental factor.

[On the inflation target] in terms of the undershoot, the explanation was huge moves in oil and commodity prices.

The judgement the MPC has to make, we see inflation rising above target in year’s 2 and 3, due to depreciation of sterling in the first half of this year, so our judgement is how quickly we return inflation to target.

Should we raise rates in August and get it to 2%, at the cost of jobs and income in the economy. Or is it wiser to look through that exchange rate move and help economy adjust. In the view of every member, it was the right course of action to provide stimulus at that point.

Why cut interest rates after Brexit when suggested not beforehand?

Carney says monetary policy would depend on supply, demand and the exchange rate. The balance of those forces which effect the path of policy.

The MPC decision is not automatic. There were scenarios when.. appropriate response would have been to tighten.

But in fact the balance was consistent with the Bank supplying more stimulus to support the economy during a period of adjustment.

That stimulus has its limits. The balance can shift. We don’t target exchange rate, we target inflation..but we are not indifferent.

Baroness Wheatcroft question: On the prime minister’s comments, she said monetary policy was an effective emergency measure and a change has to come. Does that mean monetary policy?

Carney says he does not think she meant a change in monetary policy.

Question: how long will it take to get there (normal interest rates etc)?

The framework is there, we fully understand if not welcome criticism of how we’re doing our job to get to inflation target. With time as the government prosecutes its discussions with EU, uncertainties will reduce.

There are broader forces in global economy which may take longer to dissipate.

Carney says it is frustrating to have interest rates so low for so long.

He says he has sympathy with savers, but says the Bank’s focus is on its remit to get inflation where it needs to be.

Change inflation target to help savers?

Carney says to target a specific group is not consistent with helping widest range of people and supporting whole economy.

Lord Hollick, the chair, asks about the prime minister’s concerns about the effect of QE and those who have lost out, and what the Bank could do to help.

Carney says since QE, jobs have been created, GDP has grown. That is not due to QE, but the stance has helped the UK economy during a difficult period.

Different groups will benefit in different ways. Between 2009 and 2016, most have benefited, although some more than others.

We do recognise those who rely on savings have seen lower returns.

Carney says the Bank’s independence has stood the test of time.

If it was called into question he would expect to see a risk premium on UK assets, particularly the currency, gilts and inflation expectations.

He said markets should have no reason to expect that [risk premium]. There is not a debate in parliament to change remit.

If the bank’s goal or remit was adjusted, the MPC would discharge that remit.

He said comments by individual politicians on policy would have no effect on how it discharges its responsibility.

Mark Carney is now beginning his testimony and is talking about monetary policy.

He says monetary policy has been overburdened, it is the principal if not sole vehicle to provide stimulus to the UK. He welcomes the government is signalling a resetting of the balance between monetary, fiscal and structural policy.

Sterling continues to fall ahead of Mark Carney’s testimony shortly.

It has fallen as low as $1.2082, its lowest since the flash crash earlier this month, and while the strength of the dollar and the uncertainty about what Carney will say are factors, comments from chancellor Philip Hammond earlier may also be helping to push sterling lower. Connor Campbell, financial analyst at Spreadex, said:

Sterling’s renewed slide seems to have stemmed from comments made by Philip Hammond, who not only warned that EU leaders may focus on political rather than economic issues when discussing the Brexit, but also that, when asked about the possibility of more QE, pointed out that no quantitative easing request has ever been rejected. This seems to have spooked the pound, which had actually been on a decent run of form in the past few trading sessions, and that is before Mark Carney gives his latest Brexit update in front of the House of Lords later today.

The return of the pound’s perilous trading was good news for the FTSE. The UK index had been lacking a certain spark in the last few days; now it finds itself 50 points higher, firmly above 7000 and not too far away from its all-time peak.

The weak US consumer confidence figures could pose a problem for Federal Reserve chair Janet Yellen. Mike Read, co-founder of trading network Pelican, said:

Consumers in the US could be forgiven for harbouring slight trepidations about the future, amid a controversial presidential campaign and global economic uncertainty, but Fed Chair Janet Yellen will be concerned to see the first signs of this mounting pessimism taking effect.

Observers have long earmarked December as when the Fed will raise rates again, but 2016 has been a year of surprises and many traders may now be getting cold feet at the prospect of Yellen holding off until the new year.

Paul Sirani, Chief Market Analyst at Xtrade, still thinks a December rise is on the cards:

Consumer confidence rose in September to its highest level in nine years, but that positivity has proven short-lived for Fed Chair Janet Yellen following a worse than expected October reading.

Although the U.S. economy is performing well on the whole, Yellen has been singled out for criticism by presidential candidate Donald Trump, who claims she is keeping interest rates low for political reasons.

And it seems highly unlikely that she will pull the trigger before the Presidential race in November, with a December rise more likely.

The fall in sterling has given a boost to the FTSE 100, which is now up around 70 points or 1%.

Full as it is of exporters and dollar earners, the leading index has tended to move higher as the pound weakens.

In contrast, the more domestic focused FTSE 250 is up just 0.07%.

Meanwhile the Dow Jones Industrial Average has opened slightly lower, down around 13 points.

Mark Carney’s testimony could see further pressure on the pound, says Caxton FX analyst Alexandra Russell-Oliver:

Sterling has dropped, partially as a result of pressure on the pound ahead of Carney’s testimony this afternoon (3:35pm) and partially due to dollar strength following above-forecast housing data. There is the risk of further sterling weakness/volatility during Carney’s testimony, which will focus on the economic consequences of the Brexit vote.

Cable is trading around 1.2125, near its October 11 lows, which marked its lowest levels since 1985 (excluding the flash crash drop). Sterling’s down over 0.7% against the dollar and over 0.6% against the euro since 1:30pm.

The sudden fall in the pound may be due to other factors, some believe:

And it is not just the dollar: sterling is down 0.7% against the euro at €1.116.

Hammond is asked whether he would approve another bout of quantitative easing, if the Bank of England wanted to stimulate the economy again.

The chancellor says that the BoE’s bond-buying scheme has been highly effective so far, and hints that he would not obstruct another dose if needed.

No request for quantitative easing has ever been refused, and I can’t see why it would be different in future.

Worth remembering that Theresa May, the PM, criticised QE earlier this month for making the rich richer.....

Philip Hammond has also been asked about the possibility that Brexit will cost London the ability to handle ‘euro clearing’ (the settling of derivative contracts priced in euros).

The chancellor says that the European Central Bank has already tried, and failed, once to move euro clearing into the eurozone.

He says that euro clearing is “not easily separated from other activities in London”, but it also only makes up a relatively small part of total jobs and business in the City.

Philip Hammond has also warned MPs that European leaders could prioritise political issues over economic ones, in the upcoming Brexit negotiations.

If German business chiefs are really feeling more confident, they could consider spending some of their huge cash piles.

According to the Wall Street Journal, German companies are sitting on around €450bn of cash - but are proving reluctant to invest it.

And there are fears that this could hamper growth, just when Europe desperately needs to boost activity and create jobs.

The WSJ says:

The problem isn’t unique to Germany. Companies in other developed countries have also been investing less since the financial crisis. But Germany’s low investment is striking given the country’s relatively robust economic performance—especially compared with other European countries—and its record-low unemployment.

Advocates of higher corporate investment say German parsimony is troubling, because the economy depends to such a large degree on research- and capital-intensive industries. It risks weakening the ability of Europe’s largest industrial power to grow and create jobs in future, with negative consequences for all of Europe.

“We need to be careful that Germany doesn’t fall behind technologically because of persistently low investment,” said Reinhold Festge, head of the German engineering-sector association VDMA, which represents over 3,100 midsize companies.

Here’s the full piece:

After its recent wild turbulence, sterling seems to have calmed down a little.

The pound is stubbornly stuck around the $1.22 mark this morning, as currency traders await Mark Carney’s testimony at the House of Lords.

Arnaud Masset, market analyst at Swissquote Bank, says:

Sterling remains under substantial pressure as investors continued to expect harsh consequences amid the UK decision to leave the European Union.

Eek. Shares in troubled Italian bank Monte dei Paschi have just been temporarily suspended after plunging by 23%.

They had jumped in early trading, after it announced plans to sell €28bn of bad debts and shrink its operations (see earlier post).

The jump in German business confidence has driven Frankfurt’s main share index, the DAX, up to a new 2016 high.

Chris Beauchamp of IG says:

A healthy reading from the German IFO report has buoyed risk appetite.

This jump in German business confidence comes a day after Markit reported that German companies are growing at their fastest rate since July.

Pernille Bomholdt, senior analyst at Danske Bank, reckons Germany’s economy is growing fast -- at a quarterly rate of 0.8%

German bosses are more upbeat about current trading, and their future prospects, according to today’s report from IFO.

• The current economic conditions index rose to 115 from 114.7.
  
• And the future expectations index jumped to 106.1 from 104.5.
  

The euro is hovering close to last week’s seven-month low, as investors digest the breakdown of talks with Canada over a new trade deal.

Mark Ostwald of ADM Investor Services agrees that Mark Carney will be quizzed about his future this afternoon:

Mr Carney testifies to the House of Lords Economic Affairs Committee, where he will doubtless resolutely defend the BoE’s independence, though he may face some awkward questions about whether he will extend his term to the full eight years, and indeed whether he will complete his initial five year term.

Europe’s main stock markets are following Japan’s lead, and are all up in early trading.