Paul Tucker backtracks on possibility of negative interest rates

Paul Tucker, the Bank of England deputy governor, yesterday admitted that the prospect of negative interest rates to boost lending was a non-starter, little more than two months after floating the idea.

Mr Tucker suggested to MPs in February that lenders could be charged on their deposits with the central bank in an attempt to get credit flowing in the economy.

The comments were immediately described as "blue-sky thinking" by Mr Tucker's fellow deputy governor Charlie Bean.

Mr Tucker told a regional paper: "It's most unlikely it would happen in the context of the debate within Parliament but it's important that we are open and that we should think about all sorts of things. I wouldn't want the public to think that we sit on our hands and know the answers to everything – we are always trying to think about new things."

He was also more upbeat after the economy's 0.3 per cent advance in the first quarter. "We shouldn't get too excited by one quarter but looking over the past year, it's perhaps not as bad as the headline figures suggest," he said.