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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 the…

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