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Negative interest rates could be necessary to protect UK economy, says Bank of England chief economist
Andy Haldane argues for raising UK’s inflation target in bid to give policymakers more ‘wiggle room’ in fighting downturns – and suggests cash could need to be abolished
The Bank of England may need to push its interest rates into negative territory to fight off the next recession, its chief economist has said.
Andy Haldane, one of the Bank’s nine interest rate setters, made the case for the “radical” option of supporting the economy with negative interest rates, and even suggested that cash could have to be abolished.
He said that the “the balance of risks to UK growth, and to UK inflation at the two-year horizon, is skewed squarely and significantly to the downside”.
As a result, “there could be a need to loosen rather than tighten the monetary reins as a next step to support UK growth and return inflation to target”.
Speaking at the Portadown Chamber of Commerce in Northern Ireland, Mr Haldane’s support for a possible cut in rates came as the Bank as a whole has signalled that the next move in rates would be up.