BoE deputy governor opposes negative interest rates

One of the Bank of England’s deputy governors has voiced strong opposition to setting negative interest rates, saying he thought the benchmark could not be lowered any further without counter-productive results.

Speaking in a recorded interview with the Society of Professional Economists, Dave Ramsden, deputy governor for markets and banking, said on Monday that although the central bank had negative rates in its toolbox, he did not think the policy should be used

“I see the effective lower bound [for interest rates] still at 0.1 per cent which is where Bank rate is at present. It is useful to stress that,” Sir Dave said.

His views on negative rates, which were not known specifically, demonstrate the strong opposition among many of the nine monetary policy committee members to push interest rates below zero for fear that the action would undermine the health of the banking system and not provide any economic stimulus.

They contrast with those of Silvana Tenreyro, an external MPC member, who reiterated her view at the weekend that there was “encouraging” evidence from other countries. She suggested negative rates lowered borrowing costs in the economy and helped banks because the boost they gave to borrowing and spending reduced bad debts.

Ms Tenreyro has not voted for…

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