Next Bank of England governor Andrew Bailey: Firms should expect coronavirus help
The next Bank of England governor has said Threadneedle Street and the government is likely to provide loans to small and medium-sized firms to help them deal with supply chain disruptions from the coronavirus outbreak.
Andrew Bailey told MPs that coronavirus was “going to be the first most pressing issue that we face”. He added that the virus is “evolving very quickly”.
“I think it is quite reasonable to expect that we are collectively going to have to provide some form of supply-chain finance.”
He also suggested the Bank is not yet close to carrying out an emergency rate cut, as the US Federal Reserve did yesterday.
“What we need is frankly more evidence than we have at the moment as to how this is feeding through,” he said.
“We are still looking at the evidence and the precise sort of balance of what the shock is likely to be.”
Traders now think it certain that the BoE will cut rates at its next meeting. More than 10 per cent of traders think it could even slash them by 50 basis points (0.5 percentage points).
Bailey said the Bank of England were, and must continue to, work together to tackle the economic fallout of the virus.
“We must act in a coordinated fashion, we can’t let our notions of independence get in the way,” he told parliament’s Treasury Committee.
“I have met the chancellor and we have talked about this,” Bailey said.
New chancellor Rishi Sunak, who replaced Sajid Javid in a surprise move last month, will hold a Budget on 11 March.
The first financial set-piece of the new government, it will be overshadowed by the coronavirus outbreak which has now spread to more than 60 countries and dented the global economy.