Bank of England’s focus on quantitative easing policies and improving financial market function is justified in the current phase of crisis . However , with the central bank of England slashing interest rates to 0.1% and government measures such as bond buying to fight the crisis , in recent weeks it has become debatable if the next thing is negative interest rate.
Possible Measures by Bank Of England
According to a report by Barclays, Bank of England is more likely to consider renewed asset purchases followed by further 100 billion pounds ($120 billion) of quantitative easing in June . If things don’t improve, BOE can take steps to reduce the cost of making loans and boost credit supply by reducing the term funding scheme rate and subsequently working on Yield curve control before finally announcing negative interest rates.
Reports from Barclays also mention that while policy makers suggest that negative interest rate is a potential option, they don’t foresee this decision right away and emphasis should be with careful consideration.
Bank of England seems to be debating over negative interest rates and considering the positive effect it has shown in economies elsewhere such as Europe. But moving to negative territory is expected to take considerable time while the government is focusing on quantitative easing to work out.