Back in March 2020, The Bank of England cut interest rates to a historic low of 0.1%.
Now, UK Banks have been asked by the Bank of England whether they are prepared for interest rates to be slashed to zero or below.
Sam Woods, deputy Governor at the BoE wrote, “We are requesting specific information about your firm’s current readiness,”
“We are also seeking to understand whether there may be potential for short-term solutions or workarounds, as well as permanent systems changes,”
According to Reuters, a member of the MPC of the Bank of England, Jonathan Haskel, said that they maintain an “absolutely open mind” in regards to the idea of negative rates and its impact.
He added, “Negative rates may hit bank margins but that could be offset by a positive effect for the economy,”
“Relative to expectations, August ONS data was uniformly below forecasts. We need to look more closely at why GDP data disappointed.”