Posted By linker 5
Posted on January 21, 2021
LONDON (Reuters) – Bank of England Governor Andrew Bailey said the British central bank had not taken any decisions about whether interest rates could or should be cut below zero, and it was unclear how much that would help the economy.
“We have not taken any decision, in fact we’ve not actually discussed, whether or not to introduce negative rates,” Bailey said during an online event organised by the BoE.
He said that when interest rates were close to zero, and in particular when they were negative, the ability of monetary policy to influence the economy was much less clear and it changed the “whole calculus of how the banking system works”.
“We do not know, with any confidence, how that would work,” he said.
“However, there are experiences from other countries … and the evidence suggests it isn’t straightforward but it can work in certain circumstances and depending a bit on how your financial system works.”
(Writing by William Schomberg, editing by David Milliken)