BOE's Vlieghe: No more stimulus is required if economy evolves in line with February projection
Comments by BOE policymaker, Gertjan Vlieghe
There's a bit of give and take in his remarks but generally, it will largely depend on how economic conditions develop in the coming months.
- There is no hurry at all to remove stimulus
- Preferred path is to keep current stimulus in place well into 2023, 2024
- Risks remain skewed towards a weaker scenario
- We are clearly not experiencing a V-shaped recovery
- If there is persistent slack, more monetary stimulus would be appropriate
- I would favour negative rates as the tool in that regard
- Negative rates could be needed later this year or into next year
- No evidence that negative rates have been counterproductive
- If market functioning deteriorates, BOE will not hesitate to add to QE
I would argue that a lot of that will also rest on the government's plans as to whether or not to extend the furlough program beyond the end of April. It goes without saying that the vaccine rollout and virus situation also plays a key role in all of this.
But for now, they aren't shying away from putting the idea of negative rates on ice. Although, they are constantly reminding the market that they might have use for it one day.