Economics
Why BOE Rates Could Go Negative When Economy Turns Positive
- Central bank says subzero rates might work best after pandemic
- Weakness of lenders now might curb policy’s effectiveness
A cyclist passes the Bank of England in the City of London.
Photographer: Simon Dawson/BloombergThis article is for subscribers only.
The Bank of England has raised the prospect of cutting interest rates below zero -- after the coronavirus crisis has passed.
The idea that subzero rates might be more effective in a post-pandemic revival rather than the current slump is a counterintuitive one, but there is a precedent, in the view of BOE Governor Andrew Bailey. The European Central Bank implemented negative rates in June 2014, a year after the euro zone exited a double-dip recession.