Tenreyro says she has nothing new to add on negative rates
- It's possible that more stimulus will be needed
- If negative rates are in the toolbox, that will be very important
- There's no evidence that negative rates will hurt bank profits, possible that the current structure of UK banking system could lead to a less-positive outcome
- My decisions on stimulus will depend on the outlook at the time of voting
- All else equal, looser monetary policy can help the economy recover faster
- Experiences of other countries suggest negative rates effective
- We have a very large degree of spare capacity
- Resurgence in virus likely to mean a significant loss in jobs
- Even if UK vaccinates quickly, a slower rollout in trading partners could weigh in UK
- Speed of rebound will depend on the speed that savings are released
- QE more effective to offset disruption rather than providing net additional stimulus
Tenreyro has been a fan of negative rates so this is no surprise.
