The pound fell after the Bank of England said it had briefed monetary policymakers on how a negative interest rate could be brought in, before recovering most of the lost ground in later trading.
The Bank of England kept its main stimulus programmes on hold, as expected, and said that Britain’s economy had performed better than expected.
Highlighting risks relating to rising COVID-19 cases, the unwinding of jobs protection schemes, and Brexit, the BoE said it was ready to take further action.
The bank also said that policymakers had been briefed on how a negative rate could be implemented should the outlook for inflation and output warrant it at some point during this period of low equilibrium rates.
Britain’s health minister said that the novel coronavirus was accelerating across the country, with hospital admissions doubling every eight days, but refused to say whether or not another national lockdown would be imposed next month.
The United Kingdom has reported the fifth largest number of deaths from COVID-19 in the world, after the United States, Brazil, India and Mexico, according to data collected by Johns Hopkins University of Medicine.
Asked repeatedly by Sky News about the prospect of a second national lockdown next month, Health Secretary Matt Hancock said that a lockdown was a last resort, but that the government would do whatever it takes to tackle the virus.
COVID-19 cases started to rise again in Britain in September, with between 3,000 and 4,000 positive tests recorded daily in the last week, but that is still some way behind France and its more than 10,000 cases a day.
On Thursday, Britain recorded 21 deaths from the disease, taking the total under the government’s accounting method to 41,705.