BoE not remotely close to any decision on negative rates

© Reuters. Bank of England chief economist Andy Haldane listens to the audience at an event at the Bank of England in the City of London

LONDON (Reuters) – The Bank of England is not remotely close to a decision to set interest rates below zero for the first time to help the UK economy tackle the coronavirus crisis, said Central Bank chief economist Andy Haldane .

Haldane said the key factors for the BoE were the impact of negative interest rates on UK banks and lenders, which would put pressure on margins and how such a move would affect confidence in the overall economy.

"These are the aspects we will look at," said Haldane during an online discussion organized by the Federation of British Industries on Tuesday.

"To put it bluntly: review and action are different things. We are currently in the review phase and have not yet reached agreement on what to do."

Last week, BoE governor Andrew Bailey said he was less against negative interest rates than before the escalation of the coronavirus crisis, but there were "mixed reviews" about how well they had worked for other central banks.

Haldane said Tuesday that some recent data is only "a shadow better" than an economic scenario released earlier this month by the BoE, but there is still a risk that the recovery may slow as companies and consumers remain cautious.

"This may still be a V, but maybe a fairly one-sided V," he said, referring to the shape of the downturn and economic recovery. "The risks are likely to be in the downtrend rather than the uptrend and, as I said, in a rather lengthy recovery than the one I mentioned."

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