LONDON: Market expectations for the levels of interest rates needed to stabilise Britain's economy seem reasonable, Bank of England Deputy Governor Ben Broadbent said on Thursday. Broadbent said at an economics conference in London that the so-called 'neutral' interest rate - which affect investment returns and BoE policy decisions - were likely to stay low for some time but then eventually to rise.
Asked if the neutral interest rate was currently positive, Broadbent said it was probably negative when adjusted for inflation, though he declined to put a figure on it.
"Keeping (BoE) interest rates in nominal terms where they are is roughly right. Even with official interest rates priced to rise very gradually, it looks roughly where you'd want it to be," he said. Broadbent reiterated the BoE's existing position that it would not reduce its 375 billion pounds ($600.8 billion) of bond holdings until it had raised interest rates some way above their current record-low level.
Broadbent added that the European Central Bank's policy of buying private-sector assets is potentially more powerful than if it were to buy government bonds.
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