Will interest rates go below zero?

Whither negative interest rates? The City is watching Threadneedle Street carefully for signs about whether negative interest rates could be in the pipeline, reports Gurpreet Narwan in The Times. The Bank launched a review of the idea last summer, studying how they have worked in places such as Japan and Sweden. It has also been consulting with commercial banks to establish whether the policy is “operationally feasible”.

Lenders, who would lose out from lower rates, have highlighted the operational difficulties. The policy could prove counterproductive as banks move to protect their margins and rein in lending to the real economy, Mike Regnier of Yorkshire Building Society told The Guardian. Unprepared bank IT systems could also face a “Y2K-type” bug if they tried to handle negative rates.

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The Bank won’t “shut the door entirely” on negative rates (it likes to keep something in reserve just in case), but it looks less inclined to use them. Expect lots more “creative ambiguity” from the central bank.

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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.