BOE's Vlieghe: Not yet at a point where we can reach a conclusion on negative rates

Author: Justin Low | Category: Central Banks

Comments by BOE policymaker, Gertjan Vlieghe


  • It appears downside risks are starting to materialise
  • Outlook for monetary policy is skewed towards adding further stimulus
  • The risk that negative rates end up being counterproductive is low
  • QE is probably less potent now than in March
  • Risks are skewed towards even larger job losses
  • Difficult to see a scenario where all furlough workers are reintegrated seamlessly
  • The speed of the recovery is likely to be slower while the virus remains a concern
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Despite the constant half-hearted push back against negative rates, the fact that the BOE are acknowledging the need for more action and the shortcomings of other policy steps clearly indicate which direction they are leaning to moving forward.

As the Brexit drama continues, economic data is going to start coming back into the focus for the pound as the recovery falters - at a time when fiscal aid may not be enough - and as the virus situation in the UK potentially worsens further in the months ahead.

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