Negative rates risk ‘massive dislocation’, warns ex-Barclays CEO

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The Bank of England’s flirtation with negative interest rates risks a “massive dislocation” in financial markets, according to the former chairman of Barclays.John McFarlane, who left the lender last year, joined a chorus of banking industry warnings over the weekend against the unprecedented measure.

The city veteran said once negative rates are imposed it might be difficult to return to more normal monetary policy.

He said: “Economies are interconnected, and low or negative rates have become the norm in developed economies, especially in Europe, and it is virtually impossible for a single economy to deviate significantly.

“The problem at one point is how to raise tariffs without massive upheaval.”

Mr McFarlane, 73, is now chairman of Australia’s Westpac bank, but was speaking in his personal capacity.

He suggested that widespread fears in the industry about the impact of negative rates on bank stock prices are justified.

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