Comments by BOE policymaker, Michael Saunders
- Effectiveness of any single policy tool may be less than usual
- The most effective means may be to use a range of policy tools
- Negative rates review is still ongoing
- Experience of other countries with negative rates is that a rate cut below zero lifts growth much in the same away as a rate cut above zero
- Other studies suggest the net effect of negative rates on bank profitability is small and may even be slightly positive
The takeaway here is that the BOE is not going to shut the door on negative rates, so if the economy fails to really see much upside impact from the vaccine rollout or if conditions worsen in the coming months, they can draw on that as an option.
