BoE Governor Andrew Bailey said in a speech to Queen’s University Belfast that the economy has performed a bit stronger than expected. However, there are signs that recovery might not be as strong going forward. In Q3, economic activity was around -7% to -10% lower than pre-pandemic levels. Risks include COVID, Brexit talks, US-China relationship.

On monetary policy he emphasized it’s “critically important that the BoE’s can use all its tools to support the economy.” The central bank is “not out of ammunition on QE”, and it can also use “forward guidance”.

“Negative interest rates are in the BoE’s toolbox, have not reached judgement on whether or when to use them,” he added. “We do not rule out using negative interest rates but are realistic about challenges from banking retail deposits.”

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