BoE's Bailey: Decision on negative rates is not in any sense imminent

Eren Sengezer FXStreet

The decision on negative rates is not in any sense imminent, Bank of England (BoE) Governor Andrew Bailey said on Thursday and reiterated that it's a complex issue.

Additional takeaways

"BoE is trying to work out implications for the UK economy of other countries' experience with negative rates."

"There would be important issues around implementation and communication if BoE takes rates negative."

"Evidence suggests economic downturn has not been as severe as in May scenario but let's not get carried away."

"Labour data has been mixed but I think the news was on the downside."

"Labour market news probably more relevant for judging inflation risks."

"Now expecting 20% fall in GDP in Q1 and Q2 combined vs 27% fall in May scenario."

"BoE does not have specific triggers for further increases in QE."

"MPC has not spent any time talking about targeting the yield curve."

"Slowing of the pace of QE reflects recent signs from the economy and calming of markets since March."

"We are slowing from warp speed on QE to something which is still fast by historical standards, the Fed has slowed QE pace too."

"It would be wrong to see the slowing of the pace of QE as a tightening of policy."

"Trajectory on inflation is for it to fall to very low levels."

Market reaction

The GBP/USD pair continues to edge lower after these comments and was last seen losing 0.95% on the day at 1.2435.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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