Negative interest rate may be considered

Bank of England deputy governor Paul Tucker has suggested that negative interest rates have been considered as a way of boosting lending. Negative interest rates would mean that the Bank of England would charge banks to hold their money. Speaking to MPs on the Treasury Committee, Mr Tucker said: "This is an idea that I have raised and it would be an extraordinary thing to do. It needs to be thought through carefully." Building Societies Association head of mortgage policy Paul Broadhead thinks that the negative rates would “decimate” returns to savers. He is quoted as saying: “While we have the Funding for Lending scheme, the vast majority of mortgages in our sector are funded through retail deposits. Any fall in that, based on a fall in interest rates, would not be helpful. We would strongly caution against this as an idea.” March 1, 2013