Comments by BOE governor, Andrew Bailey, in an op-ed for Bloomberg

  • Such a plan of action would give BOE more firepower in future crises
  • Elevated balance sheets could limit room to maneuver in future emergencies
  • It may be better to consider adjusting reserves first without wanting to raise rates
  • We need a robust assessment of the financial system's weaknesses
  • The role of money market funds is one area to examine
  • Bond-buying must not become a permanent feature

The headline remark is one to take note of as it could mean that even if we do see a return to better conditions in the UK economy, the central bank may not so quickly go back to raising rates but instead look towards reducing balance sheet levels first.

That is something for gilts to consider and also for the pound outlook once we start to step past the coronavirus crisis in due time. Interestingly, Bailey made no mention of negative rates in the op-ed so at least it isn't something that they feel the need to reaffirm for now.