Governor Andrew Bailey is signalling that extreme measures such as negative interest rates are on the table. Rightly so

When the Bank of England governor says he is not ruling out a cut in the cost of borrowing to below zero, you know there is trouble ahead.

Negative interest rates are the last resort of the central banker and not to be used unless absolutely essential. At least that is the thinking inside the forbidding walls of the Bank’s offices on Threadneedle Street. Only a few weeks ago , governor Andrew Bailey said, in effect, that the Bank had never lowered interest rates to below zero and wasn’t going to start now.

The problem lies with savers who are offered negative interest on their savings. What if they refuse to accept this new reality?

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