Holding steady: The Bank of England is seen in London’s financial district. Market speculation about sub-zero rates took a knock after its governor Andrew Bailey said that such policies raised many issues and may hurt banks’ lending to companies. ─ Reuters
LONDON: Traders are scrapping bets that the United Kingdom will implement negative rates this year, calling time on one of the most popular wagers of 2020 ahead of a Bank of England (BoE) meeting that’s expected to address the debate.
As the central bank readies its first policy decision since an eleventh hour Brexit trade deal, investors have all but priced out the possibility of the BoE cutting borrowing costs below zero. Money-market levels now imply no more than a risk of the bank rate turning negative within the next year, and even then, the extreme is seen at a mere two basis points beneath zero. That contrasts with bets in September for the benchmark to fall to as low as minus 0.1% by late 2021, a 20-basis-point drop from current levels.
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