PHOTO FILE: Bank of England Governor Andrew Bailey poses for a photograph on the first day of his new role at Central Bank in London, Great Britain, March 16, 2020. Remove Akmen / Pool via REUTERS
(Reuters) – Bank of England (BoE) governor Andrew Bailey wrote a letter to lenders warning them of the challenges of negative interest rates, according to the Sunday Times newspaper.
The letter said negative rates were “one of the potential tools under active review” if the monetary policy committee decided that “more stimulus” was needed to reach the BoE’s 2% inflation target, the newspaper said. bit.ly/38tyTq7. He did not reveal how he gained knowledge of the contents of the letter.
The report states that Bailey had a meeting with bank chiefs in late June and that negative rates were discussed in that meeting in which the governor stated that “every tool they have is on the table.”
On negative interest rates, Bailey previously claimed to be an option for the BoE, but that the problem was complex and that taking on sub-zero loan costs was in no way imminent.
Reporting of Kanishka Singh in Bangalore; Editing by Kenneth Maxwell