London Daily

Focus on the big picture.
Thursday, Dec 25, 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
UK Mortgage Rates Edge Lower as Bank of England Base Rate Cut Filters Through Lending Market
U.S. Supermarket Gives Customers Free Groceries for Christmas After Computer Glitch
Air India ‘Finds’ a Plane That Vanished 13 Years Ago
Caviar and Foie Gras? China Is Becoming a Luxury Food Powerhouse
Hong Kong Climbs to Second Globally in 2025 Tourism Rankings Behind Bangkok
From Sunniest Year on Record to Terror Plots and Sports Triumphs: The UK’s Defining Stories of 2025
Greta Thunberg Released on Bail After Arrest at London Pro-Palestinian Demonstration
Banksy Unveils New Winter Mural in London Amid Festive Season Excitement
UK Households Face Rising Financial Strain as Tax Increases Bite and Growth Loses Momentum
UK Government Approves Universal Studios Theme Park in Bedford Poised to Rival Disneyland Paris
UK Gambling Shares Slide as Traders Respond to Steep Tax Rises and Sector Uncertainty
Starmer and Trump Coordinate on Ukraine Peace Efforts in Latest Diplomatic Call
The Pilot Barricaded Himself in the Cockpit and Refused to Take Off: "We Are Not Leaving Until I Receive My Salary"
UK Fashion Label LK Bennett Pursues Accelerated Sale Amid Financial Struggles
U.S. Government Warns UK Over Free Speech in Pro-Life Campaigner Prosecution
Newly Released Files Shed Light on Jeffrey Epstein’s Extensive Links to the United Kingdom
Prince William and Prince George Volunteer Together at UK Homelessness Charity
UK Police Arrest Protesters Chanting ‘Globalise the Intifada’ as Authorities Recalibrate Free Speech Enforcement
Scambodia: The World Owes Thailand’s Military a Profound Debt of Gratitude
Women in Partial Nudity — and Bill Clinton in a Dress and Heels: The Images Revealed in the “Epstein Files”
US Envoy Witkoff to Convene Security Advisers from Ukraine, UK, France and Germany in Miami as Peace Efforts Intensify
UK Retailers Report Sharp Pre-Christmas Sales Decline and Weak Outlook, CBI Survey Shows
UK Government Rejects Use of Frozen Russian Assets to Fund Aid for Ukraine
UK Financial Conduct Authority Opens Formal Investigation into WH Smith After Accounting Errors
UK Issues Final Ultimatum to Roman Abramovich Over £2.5bn Chelsea Sale Funds for Ukraine
Rare Pink Fog Sweeps Across Parts of the UK as Met Office Warns of Poor Visibility
UK Police Pledge ‘More Assertive’ Enforcement to Tackle Antisemitism at Protests
UK Police Warn They Will Arrest Protesters Chanting ‘Globalise the Intifada’
Trump Files $10 Billion Defamation Lawsuit Against BBC as Broadcaster Pledges Legal Defence
UK Says U.S. Tech Deal Talks Still Active Despite Washington’s Suspension of Prosperity Pact
UK Mortgage Rules to Give Greater Flexibility to Borrowers With Irregular Incomes
UK Treasury Moves to Position Britain as Leading Global Hub for Crypto Firms
U.S. Freezes £31 Billion Tech Prosperity Deal With Britain Amid Trade Dispute
Prince Harry and Meghan’s Potential UK Return Gains New Momentum Amid Security Review and Royal Dialogue
Zelensky Opens High-Stakes Peace Talks in Berlin with Trump Envoy and European Leaders
Historical Reflections on Press Freedom Emerge Amid Debate Over Trump’s Media Policies
UK Boosts Protection for Jewish Communities After Sydney Hanukkah Attack
UK Government Declines to Comment After ICC Prosecutor Alleges Britain Threatened to Defund Court Over Israel Arrest Warrant
Apple Shutters All Retail Stores in the United Kingdom Under New National COVID-19 Lockdown
US–UK Technology Partnership Strains as Key Trade Disagreements Emerge
UK Police Confirm No Further Action Over Allegation That Andrew Asked Bodyguard to Investigate Virginia Giuffre
Giuffre Family Expresses Deep Disappointment as UK Police Decline New Inquiry Into Andrew Mountbatten-Windsor Claims
Transatlantic Trade Ambitions Hit a Snag as UK–US Deal Faces Emerging Challenges
Ex-ICC Prosecutor Alleges UK Threatened to Withdraw Funding Over Netanyahu Arrest Warrant Bid
UK Disciplinary Tribunal Clears Carter-Ruck Lawyer of Misconduct in OneCoin Case
‘Pink Ladies’ Emerge as Prominent Face of UK Anti-Immigration Protests
Nigel Farage Says Reform UK Has Become Britain’s Largest Party as Labour Membership Falls Sharply
Google DeepMind and UK Government Launch First Automated AI Lab to Accelerate Scientific Discovery
UK Economy Falters Ahead of Budget as Growth Contracts and Confidence Wanes
Australia Approves Increased Foreign Stake in Strategic Defence Shipbuilder
×