The Bank of England has just announced that they have officially instructed UK banks to make urgent preparations for the base rate to go negative.
This is a massive step change from denying that this was even a theoretical possibility only 4 months ago when I last reported on this and said I suspect that the rates are going to be going negative in the coming months.
Officially the policy is that this is a preparatory step only and nothing is certain and that nobody should take this as a cue to anything happening down the line.
But given the banks are in one of the most stressful positions they have been in for decades and dealing with unprecedented levels of interruption and customer issues, would the Bank of England instruct them to urgently take on a lot of extra work without it being necessary?
With the UK Budget set to be announced in less than 4 weeks and the next UK Monetary Policy Committee meeting scheduled for 18 March, there is a real possibility that we might see interest rates going negative then or even earlier if an emergency meeting is called.
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