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Traders No Longer See Negative Rates Even as BOE Readies Them

  • Money markets expect U.K. rates to stay above zero into 2022
  • Bets on cuts have shifted as vaccine rollout lifts sentiment
The Bank of England in the City of London.

The Bank of England in the City of London.

Photographer: Hollie Adams/Bloomberg

Markets are discounting the chances of negative interest rates in the U.K., just as the Bank of England is finally about to say whether it might pursue them.

That shows traders believe policy makers may wield the threat of negative rates without actually implementing them, hours before the central bank releases a review into how it might implement the policy. They’re betting rates will stay at zero or above through to May 2022, according to sterling overnight index swaps on Thursday.