The Bank of England left interest rates unchanged and maintained its current level of asset purchases but warned that the outlook for the economy remains unusually uncertain.
The main lending rate remains unchanged at 0.1 percent but policymakers have acknowledged they will now discuss and research how negative interest rates could possibly be implemented despite stronger than expected domestic economic data in recent months.
In minutes accompanying its latest decision to keep policy on hold on Thursday, the BoE said it would begin structured engagement with regulators on how an unprecedented slide into sub-zero rates might work.
The sterling fell by around 0.6% against the dollar in the wake of the announcement.
The central bank said there is a risk of an elevated period of unemployment after plunging a record 20.4 percent in the second quarter to officially enter recession. The UK economy saw signs of recovery with a 6.6 percent monthly expansion in July.
Britain now faces risks of a no-deal Brexit, a spike in coronavirus cases leading to the reintroduction of some social restrictions, and the end of the government’s furlough plan next month which has supported millions of dormant workers during the pandemic.
Despite stronger than expected economic data, the Bank of England said there is an elevated risk of unemployment.