The Bank of England (BOE) Governor Dave Ramsden told Reuters on Friday, it is reasonable to have an open mind on negative rates.
Additional quotes
BOE was very clear in May statement there are downside risks to post-COVID recovery.
“literal read” of latest indicators suggests Q2 GDP fall might be slightly less than BOE’s May scenario, but still very early days.
Markets are in a better place than they were, but still fragile.
It is quite possible BOE will do more QE at June meeting or subsequently.
There is plenty of headroom for more conventional QE gilt purchases.
It is reasonable to have an open mind on negative rates, but it is a very complex issue.
BOE scenario only looked at scarring from reduced investment, but stranded capital and labour market hysteresis are risks too.
BOE comments on negative rates not main driver of negative gilt yields.
Do not see a case for BOE to buy index-linked gilts or gilts with maturities under 3 years.
Buying riskier assets as part of QE would need a finance ministry indemnity.
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