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Bank of England Considers Negative Interest Rates

Wednesday 27th February, 2013

The Deputy Governor of the Band of England, Paul Tucker has said that negative interest rates should be considered. This would mean that the central bank would charge to hold the funds of other banks - in an effort to get them to shift the money out and start lending.

Speaking to MPs on the Treasury Committee, Mr Tucker said: "This would be an extraordinary thing to do and it needs to be thought through carefully."

Mr Tucker said it was just one of the proposals to be considered. It's not one without precident - and is unlikely to be popular amongst savers. Any charges banks incur from the BofE are likely to be passed onto high street interest rates and mortgages.

While it could be good news for small businesses who've been struggling to get the appropriate funding levels from the banks - the worry would be that those gains would be matched by the negative impact on the consumer.