DAVY VIEW

In August, the Bank of England signalled that negative rates would be an ineffective tool, particularly during the COVID-19 crisis. So it wasn’t too surprising yesterday to see Governor Andrew Bailey pouring cold water on speculation that the Monetary Policy Committee (MPC) would soon cut rates into negative territory. Instead, he argued that the Bank is merely insuring it has the option to cut rates in the future, ironing out operational considerations, if it finally decides to do so.