Forget about Interest, pay money to keep your money in Bank of England
BOE Steps Up Negative Rates Work as Economic Threats Mount
OMG! Is this really true? Does what we have heard from the grapevine mean that, if you are in England, forget about getting Interest on your deposit, you might have to pay money to deposit money.
According to Bloomberg, the Bank of England gave the clearest signal yet, that it may consider cutting interest rates below zero for the first time in its history as the economy faces a surge in coronavirus infections and the risk of a no-deal Brexit.
With multiple threats to the outlook looming, the BOE will begin “structured engagement” with U.K. bank regulators on how it might implement negative rates. Governor Andrew Bailey said last month the policy has become part of the central bank’s toolkit.
The comments in the minutes of Thursday’s policy decision prompted money market traders to bet that the next 10 basis points of easing will come in February, with another cut of the same magnitude to follow after the summer. The pound weakened, and was trading down 0.7% at $1.2876 at 1:36 p.m. on 17th September in London
Financial Express adds: The prospect of negative rates has typically met a cool response among policymakers who are mindful of the negative side-effects of the move in other parts of the world. But the latest statement offered a reminder that more quantitative easing, or bond buying, is not the only move left open to the BoE.
Investors are xpecting heightened volatility in the pound until November, when time runs out for Brussels and London to reach an agreement on trade before the UK drops out of the EU’s single market and customs union at the end of the year. If Britain leaves the trade bloc without an agreement, analysts said the central bank will probably cut its key rate to combat a potential economic shock.