While responding to a question about negative interest rates, Bank of England policymaker Michael Saunders said he doesn’t have anything to add beyond what Governor Andrew Bailey told parliament last week.
“I would not rule out negative rates, that does not mean I would necessarily rule it in,” Saunders added. “It’s possible that gilt yields would not fall much below the BoE bank rate with more QE, but it’s still worth doing.”
Saunders further noted that the neutral rate has fallen by more than a few basis points and was now below 2.25%.
Market reaction
The GBP/USD pair, which fell sharply at the beginning of Saunders’ speech, was last seen flat on the day at 1.2250.
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