David Jane: Are we about to see UK rates fall to zero?

Excess supply of savings

clock • 2 min read

Given the uncertain economic outlook, writes David Jane, it is not altogether implausible the UK will, at some point in the not too distant future, also follow the zero interest rate strategies already seen in Europe and Japan

Are we about to see UK rates fall to zero? Such a question might have seemed like a fabulous speculation some years ago yet it becomes a little less absurd when we see the entire German government bond market yielding less than nothing. Since the recent US rate cut and the eurozone's renewed commitment to easy money, there has been a huge downward shift in yields in most developed government bond markets. This has led to renewed talk of the absurdity of negative-yielding bonds. It also leads us to question whether the policy of ultra-low interest rates is achieving any desirable policy g...

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