London Daily

Focus on the big picture.
Thursday, Jul 31, 2025

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
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
×