BOE Unlikely to Cut Rates Below Zero in Near Term, Survey Shows

The Bank of England probably won’t cut interest rates below zero in the foreseeable future even as the growth outlook deteriorates.

Just one of 14 economists surveyed by Bloomberg anticipate a move to sub-zero rates for the first time in the BOE’s three-century history. The central bank is due to publish the results of a consultation about how such a move could be facilitated, if it was deemed necessary, alongside its first Monetary Policy Report of the year on Feb. 4.

The nine-member rate-setting committee is expected to vote unanimously to keep their bond purchase target at 895 billion pounds ($1.2 trillion) and the benchmark rate at 0.1%. The decision will be released with updated forecasts at midday on Thursday.

Most economists see policy makers lowering their GDP estimate for this year before a stronger rebound in 2022. Most of the U.K. is now in the third national lockdown since March.

The BOE reversed its previous opposition to negative rates last year, saying the policy could be in the monetary toolbox for the first time as a response to the Covid crisis. Even so, one long-standing forecaster of a cut below zero said Friday that it had changed its mind. Royal Bank of Canada, which had been predicting such a move in February since September, now says it’s no longer necessary.

Read more: RBC Drops Forecast for Negative U.K. Rates Ahead of BOE Review

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