LONDON: Britain's banks would need at least six months to prepare for any cut in interest rates below zero, the Bank of England said on Thursday as it kept its stimulus programmes on hold ahead of what it hopes will be an economic recovery later this year. The pound jumped by more than a cent against the U.S. dollar and 10-year British government bond yields rose to their highest since March as investors heavily scaled back bets the BoE would implement sub-zero rates this year.
The British central bank said it would ask banks to get ready for the possibility of negative rates, but that financial markets should not view sub-zero borrowing costs as a foregone conclusion.
"Nobody should take any signal from this," Governor Andrew Bailey told a news conference.
"My message to the markets is you really should not try to read the future behaviour of the MPC from these decisions and these actions we're taking on the toolbox."
Deputy Governor Sam Woods said most financial firms would need to make changes to their systems.
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