The statement by the Governor of the Bank of England (BOE) prompted a pound for the pound as the market entered the European session, with the US dollar beginning to show a slight decline.
However, rising US 10-year treasury yields at a 10-month high still support the greenback dollar from depreciating against most major currencies.
In a statement at the start of the European session, Bailey eased some market concerns over the implementation of negative interest rates by calling it ‘controversial’ and having many problems.
He added that the outlook for interest rates depends on the country's productivity growth.
However, this is not the first time the central bank has issued such a statement as they want to drink up market expectations for the implementation of interest rates below zero.
If the economy gets worse in the next few months, maybe they will start to reconsider using negative interest rates.
In addition, Bailey also said that the recent resumption of the Covid-19 case has put the British economy in a very difficult period that will result in a delay in recovery.
However, he is also of the view that the impact of the latest coronavirus restrictions on the economy is seen as less severe than last year's spring.
