LONDON: Bank of England (BoE) Governor Andrew Bailey has written a letter to lenders warning them of the challenges of negative interest rates, the Sunday Times newspaper reported (Jul 5).
The letter said that negative rates were "one of the potential tools under active review" if the monetary policy committee decided that "more stimulus" was needed to hit the BoE's 2 per cent inflation target, the newspaper reported. It didn't disclose how it gained knowledge of the letter's content.
The report said Bailey held a meeting with heads of banks at the end of June and that negative rates were discussed in that meeting in which the governor said "every tool they have is on the table".
On negative interest rates, Bailey has previously said that they were an option for the BoE, but that the issue was complex and taking borrowing costs below zero was not in any way imminent.