London Daily

Focus on the big picture.
Thursday, Oct 08, 2026

Bank deputy governor warns against negative rates

Bank deputy governor warns against negative rates

A Bank of England (BoE) deputy governor has spoken out against setting negative interest rates, which would bring the cost of borrowing below zero.

"At present, negative policy rates would be less effective as a tool to stimulate the economy," Sir Dave Ramsden told the Society of Professional Economists (SPE).

The Bank has so far responded to the pandemic by cutting rates to just 0.1%.

But some policymakers want it to do more.

If interest rates are negative, the BoE charges for any deposits it holds on behalf of the banks. That encourages banks to lend the money to business rather than deposit it.

But with interest rates already low, it's not clear how much negative rates would help spur new activity.

And such a move raises the risk for banks, which make money by charging interest on loans and are typically hurt by lower rates.

Reducing rates now would also come just as banks face a higher risk of losses due to the pandemic, which has strained the ability of many of their customers to keep up with repayments on loans.

Sir Dave said the Bank of England needed to consider the potential impact on banks further before acting on negative rates.

"If you've got negative rates in the toolbox, I feel duty bound, given my duties at the bank, that you've then got to explore in more detail the operational considerations which would go with implementing negative rates," Sir Dave, a member of the BoE's Monetary Policy Committee (MPC) and Deputy Governor for Markets and Banking, told SPE.

"You don't want to be in the position where you've said you think you could use them, then say at some point in the future, the committee concludes actually we should use them, then you go back and look in the toolbox, and find that actually you can't use them for an operational reason."

Analysis by Szu Ping Chan, Business Reporter, BBC News


With interest rates already close to zero, the Bank of England has been looking for creative ways to keep the economy afloat.

Only a handful of central banks have joined the negative interest rates club, including Japan, Sweden, Switzerland and the European Central Bank.

Countries like Switzerland deployed negative rates to try to stop investors from ploughing money into the country, which was pushing up the strength of its currency.

But a blueprint for the UK wouldn't be as simple as copy and paste.

Savers who don't fancy being charged to put their money in the bank will just take their business elsewhere. Britain's banks are also being hit by loan losses as borrowers struggle to keep up with repayments. Squeezing their profits could push them into deeper trouble.

In any case, negative rates aren't around the corner. The Bank of England is using the next three months to look at how they could be implemented, before deciding whether they want to open the toolbox to use them.

Sir Dave added that the MPC was "not about to use [negative interest rates] imminently", and that it would "take time" to engage with the banks.

"We're continuing with a quantitative easing programme - no one is voting at present for negative rates," said Sir Dave.

"I see the effective lower bound [for interest rates] still at 0.1%, which is where Bank rate is at present. It is useful to stress that.

Sir Dave is one of few members of the Bank's nine-member Monetary Policy Committee to share his view of negative interest rates since the bank said it was considering such a step last month.

His warning marks a contrast to recent comments by Silvana Tenreyro, an external member of the committee, who told the Sunday Telegraph that evidence from other European countries and Japan suggested that negative interest rates had succeeded in cutting borrowing costs.

The evidence also showed that banks would cope with the extra pressure on their finances, despite the coronavirus pandemic, she added.

Newsletter

Related Articles

0:00
0:00
Close
Britain Maintains Diplomatic Mission in East Jerusalem Despite Israeli Closure Deadline
English Councils Push Government to Rethink Proposed Funding Cuts
Scottish Homebuilding Falls to Lowest Level in 11 Years
BBC Chief Matt Brittin Defends Restructuring as Staff Challenge Job Cuts
UK Finance Warns High Energy Costs and Bond Yields Are Complicating Fiscal Outlook
UK Adopts All 44 Recommendations on Regulating AI in Healthcare
Chancellor John Healey Prepares Autumn Budget as Borrowing Costs Strain Public Finances
UK Investigators See Strong Indications of Iranian Link After RAF Fairford Security Operation
Laura Trott Pledges Tighter Controls on Political Activism in UK Classrooms
Welsh Ministers Launch Long-Term Review of North Wales and Anglesey Crossings
Welsh Government Orders 18-Month Study of Road Solutions Around Newport
Reform UK MP Sarah Pochin Faces Scrutiny Over £800,000 Second Home Purchase
British Households Grow More Concerned About Fuel and Energy Prices
NHS Leaders Warn of Rising Winter Pressure on Emergency Departments
Kemi Badenoch Proposes £2.3 Billion Employer National Insurance Cut for Young Workers
Middle East Conflict Could Erase UK Fiscal Headroom, Economists Warn
Manchester City Found Guilty of Multiple Premier League Financial Rule Breaches
UK Security Services Find Strong Indications of Iranian Role in RAF Fairford Incident
Costa Coffee Returns to Operating Profit on Iced Drinks and Menu Changes
Asos Warns Customers After Unauthorized Access to Retail App and Data
Kemi Badenoch Puts Growth and Deregulation at Center of Conservative Conference
Campaigners Warn of Deepening Social Care Crisis for Disabled Adults
Study Finds Rising Early-Onset Cancer Rates Among Adults Under 50 in Britain
UK Coach Operators Warn High Diesel Prices Could Force Route Cuts
FCA Opens Independent Review Into Handling of Epstein-Linked Whistleblower Case
Argentina Vows to Block Falkland Islands Offshore Oil Development
UK Chancellor Prepares Fiscal Measures and Welfare Reforms Ahead of Autumn Budget
Sainsbury’s and Morrisons Explore Potential Multi-Billion-Pound Merger
UK Weighs Tariffs on Chinese Electric Vehicles to Align With European Union
UK Threatens Diplomatic Expulsions Over Planned Closure of East Jerusalem Consulate
UK Energy Price Cap Hits Three-Year High as Middle East Conflict Raises Costs
Seventh Arrest Made in Suspected Terror Plot at RAF Fairford
Systemic Education Collapse Sparks Mass Student Uprisings in France
Green Party Faces Backlash Over Resolution Equating Zionism With Racism
Conservatives Debate Scrapping Environmental Rules for New Homes
Cornwall Insight Warns UK Energy Bills Could Approach £2,000 This Winter
UK Coach Operators Warn of Service Cuts as Diesel Prices Exceed £2
Scottish Parliament Approves £68 Billion Budget With New Tax and Property Measures
FCA Opens Independent Review Into Handling of Epstein Whistleblower
UK Government Drops Plan to Suspend Jury Trials in England and Wales
Bank of England Holds Interest Rate at 3.75% as Markets Watch November
Two Iranian Nationals Charged Over Alleged Plot Targeting Manchester Jewish Community
UK Fiscal Headroom Halves to £11 Billion Ahead of Budget, EY Warns
US Bomber Withdrawal From RAF Fairford Prompts UK Security Review
Sarah Wakfer Appointed Chair of Northern Ireland’s Health and Care Regulator
Scotland Housing Completions Fall to 11-Year Low Amid National Shortage
UK Water Companies Face Tougher Oversight and Unannounced Regulatory Inspections
Middle East Conflict Pushes UK Fuel and Wholesale Energy Prices Higher
Andy Burnham Raises Prospect of Second Brexit Referendum in Review of UK-EU Relations
EY Warns UK Fiscal Headroom Has Halved to £11 Billion Ahead of Autumn Budget
×