The Bank of England (BoE) has plenty of headroom on QE, says the central bank Deputy Governor Dave Ramsden in his speech on Wednesday.
Key quotes:
QE is BoE’s marginal policy tool.
BoE could push UK yields lower.
BoE commitment not to tighten policy until we’re confident that it is appropriate to do so and that we have seen clear evidence that we are well on the way to recovery
The burden of proof for any future tightening is high.
The effective lower bound is likely to be different across different countries.
For some countries and in some circumstances the effective lower bound may well be positive.
Negative rates would be a particular concern for the UK banking system.
UK banking sector as a whole starts from a position of strength, but risks to balance sheets are likely to be rising.
While there might be an appropriate time to use negative rates, that time is not right now.
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