BoE's Saunders: Lower bank rate would be best tool to lower yield curve

Bank of England (BoE) policymaker Michael Saunders said on Thursday that lowering the bank rate would be their best tool if they wanted to lower the yield curve, as reported by Reuters.

Additional takeaways

"The length of the COVID pandemic is having negative effects on people's skills, company balance sheets."

"The longer the crisis, the greater the risk of substantial scarring effects."

"BoE has a range of policy tools, marginal tool depends on the nature of the shock."

"Whether it will be appropriate to cut interest rates below zero in six months' time is a judgement to make then, don't need to decide yet."

"COVID pandemic likely to have a relatively small effect on the UK's equilibrium unemployment rate."

"We should view the UK recovery as incomplete until unemployment is back to near pre-pandemic levels."

Market reaction

The British pound largely ignored these comments and the GBP/USD pair was last seen gaining 0.6% on the day at 1.3936.