By Laurie Laird
LONDON (MaceNews) – Bank of England Governor Andrew Bailey Wednesday suggested that the UK central bank is likely to expand its quantitative easing program before embarking on any move to nudge interest rates into negative territory.
“We have signaled that we stand ready to do more within the framework of policies we have used to date,” Bailey wrote in an opinion piece for The Guardian, referring to the bank’s £200 billion bond buying program launched in March. The package represents 9% of UK gross domestic product, according to analysts.
But the governor did not rule out eventual reduction of interest rates, after telling members of parliament last week that he had reversed course and was willing to consider borrowing terms. “In view of the risks we faced, it is, off course, right that we consider what further options, such as cutting interest rates into unprecedented territory, might be available in the future.”
The Bank’s Monetary Policy Committee has reduced its benchmark rate on two occasions since March to a record-low 0.1%. The MPC next meets on 18 June, but both recent rate cuts have come outside of regularly-scheduled gatherings.
BoE Chief Economist Andy Haldane sounded a more cautious note on Tuesday, telling a Confederation of British Industry event that “reviewing [negative rates] and doing are different things.” Haldane also revealed that recent consumer spending data were slightly less dire than he had expected.