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MNI BRIEF: BOE's Bailey-UK Banks Dampen Negative Rate Impact

The UK banking system, with its relatively heavy reliance on retail deposits for funding, would dampen the effect of the central bank's setting a negative policy rate, Bank of England Governor Andrew Bailey said.

Bailey said research showed that the structure of the banking system was central to how negative rates feed through to the economy with banks not imposing negative rates on deposits.

"The more your banking system depends on retail deposits the less impact a negative rate will have … and we actually have quite a heavy share of retail deposits. So we do think the effect would be dampened," Bailey said in a public policy forum.

MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com

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