Haldane joins BOE push on Bloomberg negative interest rate speculation

0
18

© Reuters.

(Bloomberg) – Bank of England chief economist Andy Haldane has said a negative interest rate analysis will likely take months, strengthening the central bank’s resistance against speculation about the impending interest rate cuts.

Haldane said on Wednesday that the BOE’s decision to consider how to bring the benchmark below zero was not a signal on the likelihood of that happening. The comments come a day after Governor Andrew Bailey said the central bank had not passed judgment on whether or not to introduce the policy.

Once the work is completed, “judgments on negative rates will depend on the current economic outlook and in particular on whether or not further monetary stimulus is needed,” Haldane said in a speech.

The other factor, he said, is “whether the balance of costs and benefits of using this tool were positive and whether this cost / benefit ratio favored negative rates over other monetary tools.” This echoes a point made by Bailey about side effects due to the size and structure of the UK financial system.

Speculation on negative rates has boomed for months, but has intensified since the BOE announced it would consider the operational implications of such a move. Bailey has since said the BOE was only “laying the groundwork” on a potential future tool, without making any commitments.

Other factors playing into the discussion are the resurgence of the coronavirus, rising unemployment and the potential for a messy Brexit.

A number of policymakers have rejected the idea that action on interest rates is imminent. However, external member Silvana Tenreyro said banks “have done well” in other countries and the evidence is “encouraging”.

© 2020 Bloomberg L.P.

Warning: Fusion Media reminds you that the data contained on this website is not necessarily real-time or accurate. All CFDs (stocks, indices, futures) and Forex prices are not provided by exchanges but rather by market makers, so prices may not be precise and may differ from the actual market price. , which means that the prices are indicative and not suitable for trading purposes. Therefore, Fusion Media assumes no responsibility for any business losses that you may suffer as a result of the use of this data.

Fusion Media or anyone involved in Fusion Media will not accept any responsibility for any loss or damage resulting from reliance on any information, including data, quotes, graphics, and buy / sell signals contained in this website. Be fully informed about the risks and costs involved in trading in the financial markets, it is one of the riskiest forms of GossipMantri possible.

LEAVE A REPLY

Please enter your comment!
Please enter your name here