The Chief Economist of the UK’s central bank has made it lucidly clear that the Bank of England is not remotely close to making any decision regarding negative interest rates.
Negative interest rates has been hitting the headlines lately since it is perceived that they could help alleviate the pains the coronavirus crisis has inflicted on economies.
Andy Haldane, BoE’s Chief Economist stated, the key factors facing the central bank were the consequences of negative interest rates for British banks and lenders, as well as the squeeze negative interest rates would have on their margins and how the move would impact business confidence in the overall economy.
“Those are the aspects that we’ll look at,” said Haldane during an online discussion organized by the Confederation of British Industry on Tuesday. “To be clear, reviewing and doing are different things and currently we are in the review phase and have not reached a view remotely yet on the doing.”
These discussions comes in the wake of Andrew Bailey, BoE’s Governor stating last week, he was less opposed to negative interest rates than he was the previous week before the escalation of the coronavirus crisis. He also mentioned about “mixed reviews” on how well negative interest rates worked for other central banks.
Going by upcoming data, it appears that the British economy would be “a shade better” than the scenario expected by the bank earlier this month. Risks facing the recover of the British economy continue to remain high and the economy is likely to recover slower than anticipated with companies and consumers remaining cautious.
“This is perhaps still a V but perhaps a fairly lop-sided V,” said Bailey in reference to the shape of the economy’s downturn and recovery.
“The risks to that probably…lie to the downside rather than the up and as I say, a rather more protracted recovery even than the one that I have mentioned.”