BOE Repeats They’re Not Planning Negative Rates
The BOE threw the idea of negative rates yesterday, but they are distancing themselves now
Skerdian Meta•Friday, August 7, 2020•1 min read
The Bank of England (BOE) published a box on negative rates in its policy report yesterday – the first time it has done so – and that is inviting market participants to get used to the idea that policymakers are almost likely to pursue such a measure if the economic recovery falters. Ramsden’s remarks reaffirm their current stance that now is not the time to be pursuing such measures but it is part of the consideration moving forward:
BOE policymaker, Dave Ramsden, comments to CNBC
- We are not actively planning for negative rates
- We are using tried and test policies such as QE
- Important to stress that negative rates are now in the toolbox
- Financial structure is a key conditionality for negative rates
- Believes that BOE can support the transition by keeping rates low
- Debt, higher borrowing was a necessary response to the pandemic
- Yields in the gilt market are extraordinarily low
- Trends over many years have pushed down rates
Well, yields are obviously low when you keep toying around with the idea of negative rates. Ramsden also reaffirms the central bank’s stance from the policy meeting yesterday that inflation will return to pre-virus levels but “will take some time”.
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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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