FILE PHOTO: Bank of England Governor Andrew Bailey poses for a photograph on the first day of his new role at the Central Bank in London, Britain March 16, 2020. Tolga Akmen/Pool via REUTERS
LONDON (Reuters) – The Bank of England is looking carefully at the experience of other central banks with negative interest rates, but for the time being it wants to see how Britain’s economy responds to rate cuts it has already made, Governor Andrew Bailey said.
Bailey told lawmakers on Wednesday that while the BoE was not ruling out taking rates below zero for the first time, it was “not ruling it in” either.
“(We’re) looking very carefully at the experiences of those other central banks that have used negative rates, and a number of them are actually publishing quite interesting assessments at the moment,” he said.
The Bank of Japan and the European Central Bank have both cut rates below zero.
Bailey, who last week said the BoE was not currently contemplating taking rates negative, has recently sounded less opposed to the idea than his predecessor Mark Carney. Several other top policymakers have also left the door open.
Earlier on Wednesday, Britain sold debt for the first time with a yield below zero.
Bailey, speaking to parliament’s Treasury Committee, said the BoE wanted to observe how Britain’s economy responds to the rate cuts made in March which took its benchmark borrowing cost to a record low of 0.1%.
Economists have said they expect the BoE’s next move will be to increase the size of its war-chest for buying government bonds on June 18, at the end of its next meeting.
But investors have priced in negative rates by the end of this year.
Additonal reporting by Alistair Smout and Estelle Shirbon; writing by William Schomberg; editing by David Milliken