Negative policy rate under review for UK

The Bank of England said it expected Britain’s economy to take longer to get back to its size before the coronavirus pandemic struck and it warned of possible risks from taking interest rates below zero, Reuters reports.

The BoE said it expected the economy would not recover its end-2019 size until the end of next year.

The BoE also said its review of whether to take rates below zero was ongoing but such a move could hurt banks’ balance sheets.

“The MPC will continue to review the appropriateness of a negative policy rate as a policy tool alongside its broader toolkit,” it said.

“The MPC has other instruments available — for example, asset purchases and forward guidance. The MPC will continue to assess the appropriate monetary policy stance and will keep the appropriate tools for achieving its remit — including negative policy rates — under review.”