Bank of England (BoE) official Sam Woods said Thursday that responses from banks showed that a zero bank rate would represent less of an operational challenge than a negative interest rate, as reported by Reuters.
“The Prudential Regulation Authority (PRA) will collaborate with banks in developing short-term solutions to implement any rate below zero,” added Woods. He added that “most companies would need to make some system changes to implement a negative interest rate.”
In the BoE minutes after the meeting this week, it was indicated that the central bank will inform the PRA to begin preparations for the introduction of negative interest rates with the objective of being ready in six months. For now, the BoE made no such request. This in part, has favored the pound to rise sharply in the market in recent hours.
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