Pound flat as BoE mulls negative interest rates

<p>The pound is flat today as the BoE considers negative interest rates to boost small business lending.</p>

Sterling is flat in forex trading this afternoon (February 26th), as the Bank of England (BoE) considers the notion of negative interest rates.

The central bank is mulling the idea in a bid to force lenders to allow small businesses to borrow more.

Deputy BoE governor Paul Tucker raised the possibility in a meeting with MPs after expressing his concerns that current policies are not doing enough to reach small and medium-sized enterprises.

He stressed he was speaking for himself, but the bank's deputy governor for monetary policy Charlie Bean confirmed the idea had been raised at this month's rate-setting meeting.

Negative interest rates would mean depositors such as high street lenders would have to pay the central bank to place their money with it, but it has so far been ruled out due to the damaging effect it would have on building societies.

At 14:40 GMT, the pound slumped by 0.2 per cent versus the euro to €1.158, while it was flat against the dollar at $1.516.

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