BOE’s Bailey Says Now Is the Time to Review How Low Rates Can Go

The transcript discusses the contemplation of negative interest rates and the purchase of riskier assets. It highlights the importance of not ruling out financial tools and the need to review them periodically. The Bank of England is keen on observing the economic response to interest rate cuts and is studying the experiences of other central banks with negative rates. The transcript emphasizes the importance of context, financial system structure, and communication in implementing negative rates. It also mentions the review of financial tools like credit easing and the commercial paper facility.

What is the primary reason for keeping monetary policy tools under periodic review?

• To follow historical practices

• To comply with international standards

• To avoid making foolish decisions

• To ensure they are always effective

Why is it important to observe how the economy responds to interest rate cuts?

• To evaluate the impact on employment

• To determine the best time for tax increases

• To predict future inflation rates

• To assess the effectiveness of the cuts

What is a key factor in the effectiveness of negative interest rates according to other central banks' experiences?

• The amount of foreign investment

• The level of public understanding

• The cyclical context and financial system structure

• The size of the country's economy

What is one of the tools mentioned for credit easing?

• Commercial paper facility

• Foreign exchange reserves

• Corporate tax cuts

• Government bonds

Why is it crucial to have a comprehensive toolkit ready for rapid action?

• To comply with legal requirements

• To respond quickly to changing economic contexts

• To maintain public confidence

• To ensure political stability