Bank of England Governor Andrew Bailey said on Tuesday there were “lots of issues” with cutting interest rates below zero and such a move could hurt banks.
“In simple economics and maths terms, there is nothing to stop it at all,” Bailey said when asked about negative rates after an online speech to the Scottish Chambers of Commerce.
“However there are a lot of issues with it.”
Bailey said negative rates - the subject of a feasibility review by the BoE - would complicate banks’ efforts to earn a rate of return, potentially hurting their lending to companies, and that it was not easy to draw a direct parallel with similar action in the euro zone.
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