BoE's Haldane pulls back on negative interest rates

The Bank of England is not poised to deploy negative interest rates, its chief economist insisted on Thursday.

Speaking at an online conference hosted by the National Institute of Economic and Social Research, Andy Haldane told attendees: "We at the Bank are doing work to ensure that that tool is in the tool box.

"That is not remotely the same as saying that we are about to deploy that tool. That will depend on the balance of costs and benefits."

The Bank has written to UK lenders, asking them to detail their readiness should the Monetary Policy Committee vote in favour of negative interest rates. The cost of borrowing currently stands at 0.1%.

The Bank is widely thought to be spilt on the use of negative interest rates, however. Thursday’s speech by Haldane - who has taken a more upbeat view of the economy this year than others - echoed comments made by Sir Dave Ramsden, a deputy governor, on Wednesday, when he argued that now was not the time to experiment with negative rates.

But on Tuesday, external MPC member Gertjan Vlieghe appeared to give some cautious support to their use.

Haldane also told the NIES conference that household spending had been "remarkably resilient" during the pandemic. Reuters reported him as noting how US spending had suffered relatively little from a second wave, and that might prove the case in the UK as well.

Sterling slipped on the comments and by 1145 BST was trading down 0.3% against the dollar at 1.3115.