Lenders asked to be ready for negative interest rates in six months

Industry News | 04/02/21

PRA-regulated firms should be ready to implement a negative Bank Rate at any point after six months, the Bank of England’s Monetary Policy Committee has decided.

The PRA had previously engaged with lenders in October 2020 to discuss the possible implementation of a zero or negative Bank Rate, but firms had not been asked to begin taking any steps to ensure that they were operationally ready.

In its latest meeting, the MPC discussed when, and if so at what point, the PRA should ask firms to begin ‘tactical preparations’ in order to be ready for negative rates. Some members were concerned that the request could be “misconstrued as a signal that the MPC setting a negative Bank Rate was in prospect, or even imminent”.

Source: Financial Reporter