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- BoE's MPC member Vlieghe: Negative rates could be needed later this year or into next year - Reuters
BoE's MPC member Vlieghe: Negative rates could be needed later this year or into next year - Reuters
- If the economy evolves broadly in line with our central projection, in my view, it is likely that no further monetary stimulus is required
- My preferred path for policy would be to keep current monetary stimulus in place until well into 2023 or 2024
- We are clearly not experiencing a V-shaped recovery
- There is also the possibility of weaker scenario, and my own view is that risks remain skewed in this direction
- Even small amount of persistent labour market slack would be enough to keep wage pressure too low
- In such a scenario, I judge more monetary stimulus would be appropriate; I would favour a negative bank rate as tool to implement the stimulus
- No evidence that negative rates have been counterproductive
- Possible that we have short period of pent up demand, after which demand eases back again
- It would be a policy error to respond to such circumstances with early monetary tightening
- Even if the economy recovers more strongly than in our central projection, I think the removal of monetary stimulus is unlikely to become appropriate until well into 2022
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