The Bank of England’s Monetary Policy Committee has told the UK’s banks to prepare for negative interest rates within the next six months.
While the Bank stressed this doesn’t mean negative rates are necessarily going to be put in place, policymakers want to be ready to bring interest rates below zero if necessary.
The request was made at the same time the Bank of England opted to hold interest rates at a record low of 0.1%.
Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “The Bank of England has asked banks to get ready for negative interest rates, which will have struck fear into the hearts of millions of cautious savers.
“They’re already suffering truly dire returns from high street banks, so the thought of having to pay a bank to hold their savings is unbearable. Fortunately it’s also unlikely.
“The Bank was at pains to stress in the meeting that negative rates might never happen. The more that inflation rises closer to the 2% target, the less likely negative rates become, and the Bank is expecting inflation to kick in during the first half of 2021.”
This post has originally been featured in Property Wire.