The minutes of the meeting held last week said the Monetary Policy Committee had been briefed on plans to explore how a negative bank rate could be effectively implemented.
However, speaking at the British Chambers of Commerce’s (BCC) virtual event today, Bailey (pictured) said it was only referencing the tools BoE had to hand.
He said: “Yes it’s in the tool bag, but it doesn’t imply anything about the possibility of us using negative instruments.
“We have looked hard at the question of what scope there is to cut interest rates further and particularly negative interest rates.”
Speculation that interest rates could drop from their historical low of 0.1 per cent into the negative has been discussed since the pandemic took hold of the UK.
In May, BoE’s deputy governor Ben Broadbent said it had been thought about on and off since the financial crisis in 2008 but he said in some cases, it could do more harm than good.
Bailey echoed these sentiments during the BCC event as he said the use of negative rates had produced mixed results in other countries and people should not put too much weight into statements around it.
He added: “Nobody should read more into [it] than that’s the next stage of the work.”