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Resist the siren song of negative interest rates

The best central bank policy for our times is “masterly inactivity”

By Andrew Sentance  

The Bank of England. Photo: Yui Mok/PA Archive/PA Images

Andrew Bailey, who recently took up his new post as Governor of the Bank of England, has caused a stir by speculating about the possibility of negative interest rates arriving in the UK. He told a parliamentary committee that it would be “foolish” to rule out such a policy. His colleague Andy Haldane—the Bank’s Chief Economist—has been musing publicly along the same lines.

Japan, the eurozone, Switzerland, Sweden and Denmark have all introduced negative rates in some form over…

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