BoE's Mann: Negative rates have limited marginal effect on financial conditions

"Asset prices provide important information about the transmission of monetary policy to the real economy and inflation," noted Catherine Mann, the newest member of the Bank of England's Monetary Policy Committee, on Monday.

Additional takeaways

"Asset prices and their relationship to financial stability also are important for monetary policy considerations."

"The effectiveness of unconventional monetary policies such as quantitative easing and negative interest rates depends importantly on the domestic and global economic growth and policy environments."

"US research showed state-contingent forward guidance was the tool most associated with improved financial conditions."

"With regard to negative interest rates, this tool was generally deployed after other tools, so the marginal effect on financial conditions was limited."

"So long as inflation does not spiral, a positive inflation premium on longer duration securities is consistent with a positive economic climate and not a negative signal for markets.

Market reaction

The GBP/USD pair continues to push lower after these comments and was last seen losing 0.75% on the day at 1.3670.