Bank of England Governor Andrew Bailey on Tuesday issued a statement that the UK economy is facing bleak and recent times the BoE is assessing interest rates below zero as one of the measures to generate economic growth.
According to Bailey, the increase in Covid-19 cases will have a big impact on the economy in the next few months although recovery will be seen after the Covid-19 vaccine is distributed.
Bailey's comments came after finance minister Rishi Sunak warned the economy would get worse before it showed a recovery. In addition, the UK has imposed national control movements 3 times.
Bailey declined to comment on whether more stimulus will be announced on February 4 and even more data before making a decision.
The sterling continued to depreciate against the Euro and the US dollar after 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.
Most economists think the British economy tends to return to recession by contracting in the quarter-finals of 2020 and the first quarter of 2021. This is because past records show a 25% drop in output for the first two months of movement control.
