BoE’s Vlieghe urges for more stimulus amid COVID risks
LONDON (UK) – Bank of England policymaker Gertjan Vlieghe said on Tuesday that the central bank could have to add more stimulus as risks to the economy have increased with rising COVID cases. He also voiced some cautious support for negative interest rates.
The BoE has almost increased its asset purchase programme to double the amount since the start of the pandemic, to 745 billion pounds ($966 billion).
Vlieghe said in a speech published by the BoE, “In my view, the outlook for monetary policy is skewed towards adding further stimulus.”
He added, “Given that virus prevalence has been increasing again recently, it is likely to weigh more heavily on economic activity. Indeed, it appears that the downside risks to the economic outlook are starting to materialise.”
The BoE is also looking into whether it is effective to cut interest rates below zero, by following the European Central Bank and Bank of Japan have done.
Vlieghe said the BoE had not reached a conclusion on this, but he did not have a fundamental objection and that it was important to look at new ways to support growth.
He said, “My own view is that the risk that negative rates end up being counterproductive to the aims of monetary policy is low.”
He added, “Given how low short-term and long-term interest rates already are, headroom for monetary policy is limited, and we must consider ways to extend that headroom.”