The Bank of England (BOE) has reportedly requested information from financial institutions on their readiness for the implementation of negative interest rates.
In a letter sent to the bank, Deputy Governor Sam Woods requested specific information on the firm’s readiness to deal with interest rates below zero without compromising their business and how it is prepared to implement this implementation.
BOEs and lenders should understand the implications of any steps to be taken, as members of the Monetary Policy Committee (MPC) may need to take a number of options based on the current situation.
In addition, Woods also said that he wanted to know if there was a technological challenge to apply zero or negative rates.
The central bank has set a deadline of November 12, which is one week after the announcement of the next monetary policy for these financial institutions to respond.
Last week, investors rejected the possibility that the BOE would cut interest rates below zero in the near future, where it is expected to be implemented in May 2021.
The BOE lowered its interest rate to a low of 0.1% in March to support the economy in the face of the coronavirus crisis. The next step is expected to see an increase in the bond purchase program in November.
The pound remained trading strong above the 1.3000 price level against the US dollar despite pressure from uncertainty in Brexit trade negotiations and new sanctions measures to be announced today.
