Comments from the BOE's Ramsden
- MPC's earlier statement that negative rates at this time could be less effective still applies
- Burden of proof for any future tightening is high
- Negative rates certainly in toolbox for potential use in future as assessment of effectiveness changes
- Lower bound is likely to be different across different countries
- In some countries lower bound could be positive
- Not asking firms to take steps to ensure they are operationally ready for negative rates, asking for information instead
- Negative rates would be a particular concern for UK banking system
- Forward guidance particularly valuable
- BOE committed not to tighten policy until we are confident that it is appropriate to do so
Every time they talk about negative rates it feels like we're getting closer to making it a reality even though Ramsden is speaking out against them here:
While there might be an appropriate time to use negative rates, that time is not right now, when the economy and financial sector are already grappling with the effects of an unprecedented crisis, as well as the myriad uncertainties the crisis has created."
