BOE tells banks to start preparing for negative rates if needed

[LONDON] The Bank of England told banks to start preparing for negative interest rates, while saying that message shouldn't be seen as a signal that the policy is imminent.

Officials have been reviewing the case for negative rates for almost a year as they examine their options to help to pull the UK out of its worst slump in three centuries. Consultations with banks found that implementing negative rates within six months would pose increased operational risks.

"While the Committee was clear that it did not wish to send any signal that it intended to set a negative Bank Rate at some point in the future, on balance, it concluded overall that it would be appropriate to start the preparations to provide the capability to do so if necessary in the future," officials said in minutes of its February meeting.

The controversial policy has already been implemented in the European Union and Japan, though the BOE has never taken its rate below the current level of 0.1 per cent.

BLOOMBERG