Since last year there have been rumors that the Bank of Englah (BoE) wants to impose a negative interest rate but it has not yet been implemented. At the first meeting of the Monetary Policy Committee (MPC) in 2021, policymakers stated that British banks need at least six months to prepare to face negative interest rates. At the same time the BoE also decided to postpone the stimulus program ahead of the economic recovery.
The central bank has conducted a survey of banks in Britain. The survey is about the readiness of lender firms such as HSBC, Lloyds and Barclays in implementing negative rates for the first time.
Based on the results of the survey found that the implementation of negative bank rates in less than six months will increase operational risk.
The currency also jumped 0.22% against the US dollar to the 1.3675 exchange rate as of 9.10 p.m. Government bond yields jumped by 3 basis points as market players reduced expectations that the BoE would not implement negative rates in the near future.
The BOE also said that they did not want to give a signal on the negative rate but it is appropriate for banks in the UK to start making preparations to deal with the possible implementation of negative interest rates after a period of 6 months.
On the other hand, the BoE expects the economy to decline by 4% in the first three months of 2021 but is expected to record a rapid recovery in the next phase.
