Andrew Hauser, the Bank of England's executive director for markets, said the central bank's fight against inflation would be hampered if it no longer paid banks its standard interest rate on cash they hold with it.

"The basis of our regime is reserves remuneration," Hauser told a central banking conference hosted by King's College London.

"If we didn't remunerate reserves, (market interest) rates would fall below the Bank Rate. And at a time when we're trying to bring inflation down, that would be uncomfortable." (Reporting by David Milliken Editing by William Schomberg)