Andrew Bailey: Bank of England will take ‘prompt action’ over coronavirus if needed
New Bank of England governor Andrew Bailey has pledged to take more “prompt action” when needed to tackle the economic fallout from coronavirus, raising the prospect of another interest rate cut.
Speaking for the first time as governor after replacing Mark Carney today, Bailey emphasised in a BBC interview the “strong coordination among central bank” around the world in dealing with what is now an economic crisis.
The interview came just hours after the US Federal Reserve announced a dramatic stimulus package of a kind not seen since 2008.
The Fed slashed rates to a target range of zero to 0.25 per cent, announced $700bn extra asset purchases, and boosted dollar swap lines with foreign central banks.
Bailey said the swap lines – which provide foreign central banks with cheap access to dollars – are particularly important “because you saw some pretty big dislocations in financial markets last week”.
Yet global markets took little comfort in the Fed’s move and today continued their weeks-long decline. The FTSE 100 has now fallen 30 per cent since recent highs, putting it well into bear market territory.
Bailey is destined to spend the first half a year at least dealing with coronavirus. He said: “We’re going to be very focused on the response to covid.”
The Bank of England last week slashed rates in an emergency move, which also had little effect on markets.
The new governor said the Bank is “very keen” to avoid long-term damage to the UK economy. “That’s why you saw prompt action last week, that’s why you will see prompt action again when we need to take it, and the public can be assured of that.”
Economists and investors are almost solely focused on the spread of the virus and think monetary policy can do little to prevent economic disruption from people self-quarantining and offices and factories closed.