Sixty-four per cent of investors are concerned by the prospect of negative interest rates, a survey by HYCM has found.

HYCM’s research also suggested 55% of investors are not sure how negative interest rates would affect their financial portfolio, while 54% are making short-term financial decisions due to market uncertainty.

The findings were based on a study among 975 investors, all of whom have investments in excess of £10,000, excluding the value of their residential property and workplace pensions.

The Bank of England’s Monetary Policy Committee (MPC) is due to meet on Thursday 4 February, with recent comments from members of the MPC suggesting that negative interest rates could be introduced at some point in 2021, to help boost the UK’s economic growth.

When it comes to investor confidence, 50% of the surveyed investors indicated they are optimistic that the financial markets will fully recover this year from the disruption caused by the COVID-19 pandemic.

HYCM chief currency analyst, Giles Coghlan, commented: “More clarity is needed as to whether the Bank of England will need to use negative interest rates, especially now there has been a positive Brexit deal for the UK at the start of 2021.

“For now, we know that Governor Andrew Bailey wants negative interest rates to remain part of the Bank’s ‘tool kit’. Whether they will be deployed is another matter.

“Should investors be worried? My short answer is no. Yes, negative rates could affect rates linked to mortgages, credit cards and personal loans. However, retail investors should not expect to pay interest on the cash they are holding in bank savings accounts as this has not happened in Switzerland which currently have negative interest rates of -0.75%.

“I’m more interested to see how the pound and FTSE could react to such an announcement and whether this might lead to new investment opportunities. Certainly, a walking back from the use of negative interest rates creates opportunities for short-term GBP strength at the very least.”

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