BoE might need negative rates if recovery disappoints - Vlieghe

February 19, 2021

LONDON (Feb 19) - The Bank of England might need to cut interest rates below zero later this year or in 2022 if the economic recovery disappoints, and especially if there is persistent unemployment, policymaker Gertjan Vlieghe said on Friday.

Vlieghe said his central scenario was that the BoE would not need to loosen policy if the recovery took place as forecast by the central bank earlier this month, but that there was a risk of lasting labour market weakness depressing wages and prices.

“In such a scenario, I judge more monetary stimulus would be appropriate, and I would favour a negative Bank Rate as the tool to implement the stimulus,” he said in a speech published by the BoE.

“The time to implement it would be whenever the data, or the balance of risks around it, suggest that the recovery is falling short of fully eliminating economic slack, which might be later this year or into next year,” he added.


Silver Phoenix Twitter                 Silver Phoenix on Facebook