MNI POLICY: BOE's Ramsden-Time Not Right For Negative Rates

Bank of England Deputy Governor Dave Ramsden said the time was not right for the introduction of negative rates but he stood ready to use them in future and argued that headroom remained for more quantitative easing.

While gilt yields were already low the Bank could push them flatter still through additional QE, Ramsden said in a speech. However he noted that the BOE had still not asked banks to take concrete steps to prepare for negative rates as it continues its consultation on the operational impact of such a policy on the financial system.

At a time when maintaining bank lending is key, negative rates could squeeze margins, and while there may be a time to bring them in "that time is not right now," he said.

"It would be wrong to claim a tool is in your toolbox if you aren't able to use it when it's needed," Ramsden said, referring to the still-pending result of the consultation on negative rates.

On QE, Ramsden said that while yields on long dated gilts were already low "that doesn't mean they couldn't still go lower."