UK: BoE should cut rates – ANZ

UK growth rebounded in early 2020, but global weakness is overshadowing that. Outgoing Governor Carney says negative rates and additional QE are possible, and extreme, policy tools. The Bank of England should cut rates in the opinion of economists at ANZ Research.

Key quotes

“COVID-19 will depress productivity growth further in the short run. The UK’s 11 March budget will be expansionary. Recent developments may increase the degree of fiscal stimulus.”

“The BoE has signalled its willingness to cut rates, substantially if needed. Bailey takes charge of the BoE this month, but shouldn’t obstruct policy easing.”

“GBP weakened into the start of the EU trade talks, gilt yields are at record lows.”