Calling for near zero positive interest rates has become a hawkish position in the UK. In the Bank of England, debates over the use of negative interest rates are gaining traction. For now, most households and companies are risk-averse. Later, negative rates could play a useful role as a stimulus to investment once a post-pandemic recovery has begun.

Sterling rallied on Monday when Dave Ramsden, the deputy governor for markets and banking, said that the central bank was not about to use negative rates. That does not mean the BoE has rejected the policy outright. Using negative rates remained very much in the bank’s “toolbox” for the future, he said. His boss Andrew Bailey said something similar on Tuesday. Two-year gilt yields, whose spread with German Bunds have closed dramatically this year, could slip below zero in the year ahead.