BOE Repeats They’re Not Planning Negative Rates

Posted Friday, August 7, 2020 by
Skerdian Meta • 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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