By Laurie Laird
LONDON (MaceNews) – The Bank of England is continuing to assess the efficacy of negative interest rates, despite a stronger-than-expected economy recovery, the bank’s chief economist said Monday.
Sub-zero interest rates are “actively under review,” said Andy Haldane, addressing the UK’s Treasury Select Committee. The bank could also consider expanding its quantitative easing program, including the accelerated purchase of private sector assets.
The bank implemented two emergency rate cuts in March, pushing rates to a record-low 0.1% and has embarked on a £300 billion quantitative easing program. Haldane, who has been publicly bullish on economic growth, was the only member of the Bank’s Monetary Policy Committee to vote against expanding the program at the bank’s rate-setting meeting last month.
Haldane repeated his assertions that the UK economy bottomed out in mid April and has been expanding by approximately 1% per week since then. He believes output contracted by 20% in the second quarter, less severe than the bank’s earlier forecast of a 28% plunge.
The chief economist also stressed that the jobless rate — which remained below 4% in the three months to May — “almost certainly” understates the level of unemployment in the economy.
The UK Treasury has subsidised the wages of furloughed workers up to a ceiling of £2,500 a month. That scheme will end in October, raising fears that joblessness could skyrocket come autumn.