davejl

davejl

If the Bank of England base rate goes negative, as suggested, would this affect offshore sterling rates? Does anyone know? Just thinking about where to move my savings when the rates fall even lower...!!

sabretoothtigger

Its negative vs inflation already so it only matters technically I guess. Anyone saving sterling is losing money slowly

I think its unlikely move as it would make obvious what is already true and possibly upsets gilt holders who are fairly vital

grey_gym_sock

yes, it would affect offshore sterling accounts, because their rates generally move in the same way as onshore sterling accounts. if anything, offshore accounts would be more likely to actually try charging a negative interest rate, because the depositors might find it impractical to withdraw cash to avoid paying the interest - unlike savers in the UK.

surely gilt holders would be delighted by negative rates, because the price of gilts already issued (paying a fixed, positive interest rate) could go even higher. well, not necessarily if the expectation for longer-term rates rose. but it's not obviously bad for gilt holders.

sabretoothtigger

Sure on the face of it, but they are already playing that kind of logic to the full. I think it'd trip things up and highlight that cash delivered by the bonds is depreciating not as the gilt prices might suggest becoming scarcer