The governor of Bank of england (BoE, for its acronym in English), Andrew Bailey, has been blunt: negative interest rates are part of the battery of tools at the disposal of the central bank to tackle the coronavirus crisis. What's more, he has ensured that the institution has enough firepower to cope with the environment that has caused the Covid-19 pandemic.
This was assured during his speech this Friday at the Jackson Hole symposium, which this year is being held virtually due to the virus. "Our toolbox includes the possibility of negative rates," said Bailey, who insisted that "we have not run out of firepower by no means, and to be honest, from today's vantage point it seems that we were too cautious about our firepower before Covid. "
It should be remembered that on August 6, the Bank of England's Monetary Policy Committee decided, unanimously, maintain the reference interest rate for its operations at the historical minimum of 0.1%, as well as go ahead unchanged with its current asset purchase program for the amount of £ 745 billion (832,478 million euros).
Likewise, the institution revised up its macroeconomic projections, which point to a contraction of the United Kingdom's GDP of 9.5% in 2020, compared to the 14% fall forecast last May, with a rebound of 9% in 2021, which will continue in 2022 with an estimated growth of 3.5% of GDP, when in May it had forecast an expansion of 15% next year and 3% the following year.
The Bank of England's Monetary Policy Committee will meet again on September 17.
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