Angus Energy to drill new Saltfleetby side-track before First Gas to avoid safety complications. Watch the full video here.

Less Ads, More Data, More Tools Register for FREE

UPDATE 2-Bank of England's Ramsden sees floor for rates above zero

Mon, 28th Sep 2020 11:10

* Ramsden says he thinks 0.1% is floor for rates

* BoE looking at possibility of negative rates

* "We are not about to use them imminently" - Ramsden

* Sterling extends rise on his comments
(Adds details and background)

By William Schomberg and David Milliken

LONDON, Sept 28 (Reuters) - Bank of England Deputy Governor
Dave Ramsden said he thought the floor for the central bank's
key interest rate was 0.1% but the BoE was "duty-bound" to
consider going below zero as part of its efforts to help the
economy through its coronavirus crisis.

"For me, I see the effective lower bound still at 0.1 which
is where Bank Rate is at present," Ramsden said in an interview
with Britain's Society of Professional Economists posted online.

Sterling extended its rise against the dollar and the euro
after his comments.

The BoE said this month it would look at how it might be
able to implement negative rates if they were needed, building
on an announcement in August that the option was part of its
toolbox.

One of the BoE's nine interest-rate setters, Silvana
Tenreyro, said in a newspaper interview published on Saturday
that the investigation into whether negative rates might help
the economy had found "encouraging" evidence.

Ramsden said in his interview with the SPE that there were
some jurisdictions where negative rates appeared more effective
than in the euro zone and Japan, but their usefulness depended
on the economic cycle and the structure of the banking system.

The BoE cut interest rates to a record-low 0.1% in March,
and until this year it had always ruled out negative rates,
saying they would hurt Britain's banks and building society
lenders.

But the scale of the COVID-19 hit to the economy, and the
possibility of Britain failing to strike a trade deal with the
European Union, have forced the BoE to reconsider.

Ramsden said interest rates on households' bank deposits
tended not to fall below zero when central banks pushed their
benchmark rates into negative territory - which could hurt banks
as the gap between lending and funding rates would narrow.

Britain's banks were also likely to be hit by higher loan
losses soon as borrowers struggle to cope with the coronavirus
hit, he added.

That represented a different phase of the economic cycle to
when the European Central Bank introduced negative rates, which
took place during a recovery phase.

Ramsden said the BoE was not going to use negative rates
soon and engagement with banks on the possible change would take
time, echoing comments from his colleagues.

"We are not about to use them imminently. It will take time
to do this work," he said.

Ramsden also said he was focused on the risk that
unemployment could rise further than the central case in the
BoE's most recent forecasts.

"For me, when we're looking at unemployment, it is more
likely that unemployment will end up peaking higher than 7.5%
than lower, and it will end up coming down more gradually," he
said.

Official figures show unemployment of 4.1% for the three
months to June.
(Reporting by William Schomberg and David Milliken; Editing by
Alison Williams)

More News

US close: Wall Street weaker despite solid retail results

(Sharecast News) - Wall Street stocks closed weaker on Tuesday, even after some solid earnings from big-box retailers including Walmart, Home Depot and Macy's.

Today 00:19

UK's Johnson announces urban renewal plans after promise to "level up"

LONDON, May 19 (Reuters) - British Prime Minister Boris Johnson on Wednesday announced a series of urban renewal projects worth 830 million pounds ($1.2 billion) in towns and cities away from London as part of his promise to "level up" the countr...

Today 00:01

GLOBAL MARKETS-Stocks fall with tech shares; dollar touches lowest since late February

* All three major stock indexes end lower* Dollar, oil lower* Eyes on Fed minutes (New throughout, updates to U.S. market close)By Caroline ValetkevitchNEW YORK, May 18 (Reuters) - Wall Street stocks fell on Tuesday, with technology shares turning ...

18 May 21 22:53

UPDATE 1-Spain approves Pfizer shots for under-60s who got AstraZeneca first dose -El Pais

(Updates with reported approval)MADRID, May 18 (Reuters) - Spain's public health commission has approved a proposal by the health ministry that Spaniards under 60 who have received a first dose of AstraZeneca's vaccine get a second shot of the cor...

18 May 21 21:46

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.