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VIEW: J.P.Morgan: No Insurmountable Barriers Re: -ve Rates

BOE

J.P.Morgan do not see "any insurmountable technical barriers to the BoE following the ECB with a move to -50bp, for example. The question is more about whether the main costs associated with doing so - political sensitivities and shielding the banks from the adverse impact on profit margins - outweigh the stimulus that would be provided. We currently have no further easing in the forecast, with growth now set to enter a recovery. The most likely time for the BoE to deliver further easing is in our view around the turn of the year when the UK could experience disruption at the end of the Brexit transition period. Depending on the outcome, we could imagine the BoE cutting rates to zero and introducing a fresh package of asset purchases that includes credit easing. But we assume the BoE will not see this as a good time to start experimenting with negative rates. That would not rule out use of the policy in the future, but it would buy some more time for households, banks, and firms to plan for the possibility."

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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