Bank of England's Saunders says floor for rates might be just below zero


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© Reuters. The outbreak of the coronavirus disease (COVID-19), in London

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LONDON (Reuters) – Bank of England policymaker Michael Saunders said on Friday the effective floor for interest rates might be a “little below zero” although there was “considerable uncertainty” over its exact level.

“This has several implications for the appropriate setting of monetary policy at present,” Saunders said in a speech.

The BoE is currently reviewing the operational feasibility of taking its benchmark interest rate negative, below its current level of 0.1%.

Saunders also said the BoE might need to do more to help Britain’s economy if growth turns out to be weaker than it has forecast.

“Monetary policy may need to do more if these downside risks develop, in order to provide a bridge for the economy during the period of restrictions, and to underpin recovery as restrictions ease,” he said.

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