Bailey underscored that, given what the BoE has done in the past few weeks, there ought to be no surprise that the Bank is keeping its tools under active review in the current situation. He also stressed the Bank would be keen to observe the impact of previous rate cuts, bearing in mind arguments that such moves become less effective as the rate gets closer to zero. The BoE also seems to be examining the experience of other central banks that have cut rates below zero.
This is hardly an endorsement of negative rates but comes amid comments from other members of the Monetary Policy Committee that the Bank cannot and ought to not rule out such a move. Even so, rather than a genuine indication of its policy priorities possibly shifting from more QE, the BoE may be acting tactically, seeking to use rhetoric to embed low-to-negative rate expectations within markets and thus buttress its forward guidance.