In a speech, BoE Deputy Governor Dave Ramsden talked about “the Monetary Policy Toolbox in the UK“. QE is an “effective tool” for stimulating demand for 11 years of its use in the UK. There is “headroom” remaining and it’s a “tried and tested tool” as “marginal policy tool at present”. Forward guidance is another tool that currently “reflects the ongoing uncertainties” and it means the “burden of proof for any future tightening is high”.
He also reiterated that negative policy rates at this time could be “less effective a tool to stimulate the economy”. But they’re “certainly in the toolbox for potential use in future”. In his own areas of responsibility, Ramsden is working to “ensure all our systems would be able to handle negative rates if needed”.
In these uncertain times, and with an array of risks to contend with, from Covid, from Brexit and from wider geopolitical developments, the MPC is clear that the range of actions that could be taken remains under review,” he added”. “I head into our upcoming meetings in the belief that we are equipped with an effective set of tools in out tool box”.
