Since the emergence of the coronavirus crisis, the Bank of England has cut official interest rates to 0.1 per cent, the lowest level in its 326-year history. Financial markets are signalling that traders expect the Bank to adopt negative interest rates next year. It would be an unprecedented measure of monetary stimulus, and it would probably be a mistake. At the very least, it would have damaging side-effects that would take a long time to heal.

Speaking to the House of Lords last week, Andrew Bailey, governor of the Bank, was cautious about the prospect of negative interest rates. The Bank, he said, was not yet in a position to decide whether to cut rates to less than zero. But it is doing preparatory investigative



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