We will continue to watch the experience of other countries – the Swiss policy rate, for example, is currently minus 0.75 per cent – and we will also consider what adjustments might need to be made to the Bank’s operational framework should they ever be required.
To sum up, once interest rates reach very low levels, the central bank still has meaningful tools that it can deploy in its pursuit of its inflation target: offering forward guidance to financial markets to enhance policy effectiveness, large-scale asset purchases, funding for credit, and pushing short-term interest rates below zero. What else have we learned?