Bank of England (BoE) member Charles Bean said on Wednesday that there are no plans to introduce negative interest rates.

The statement follows a discussion in which fellow policymaker Paul Tucker brought up the idea of negative rates as an option for stimulus, amidst speculation over whether additional quantitative easing will be announced in the next monetary policy meeting.

Charging banks to park their money at the central bank to get them to lend more is "blue sky thinking", Bean said.

"Any suggestion that we have a plan to introduce negative interest rates immediately, I should make absolutely clear, is not the case," he added.

Policymakers are increasingly under the spotlight after the central bank's inflation report revealed that they would be more willing to withstand inflation pressures in order to apply additional stimulus. Expectations increased further when the bank's latest meeting minutes revealed that more members voted for an increase in quantitative easing (QE) than the month before. Nevertheless, the majority (six against three) still voted to leave it unchanged.

"I remain open to doing more QE, depending on the outlook for demand and inflation," Tucker said to Members of Parliament (MPs) on Tuesday.

"Nobody on the committee thinks that QE has reached the end of the road and that it is not a useful instrument any more. We stand prepared to do more, if we judge that necessary," he said.

In a separate report to MPs, Bean said that he expected the British economy to improve gradually.

"At present, my expectation is that growth will gradually strengthen this year and next on the back of that, a further easing in credit conditions, and an improvement in the global environment. But downside risks remain, especially in the euro area," he said.

Tucker's comments on Tuesday revealed that he was open to the idea of more QE under the right conditions. He was one of the members to vote against it the last time around. However, if he jumps on board the vote would be a close five-to-four.

Bean for his part also voted down the programme, but his latest comments suggest that he is not about to change sides any time soon.

JP

Related share prices