Bank of England governor Andrew Bailey has said the BoE “is going to do everything we can” to help the UK economy as it faces the prospect of a second lockdown.
Speaking at a British Chambers of Commerce webinar, Bailey said the recent rise in coronavirus cases and new government restrictions were “extremely difficult news for all of us and the whole country”.
His words came as the government prepared to impose a 10pm curfew on pubs and restaurants. It is also rowing back on its advice that people return to the workplace.
The government is reacting to a surge in coronavirus cases. New cases topped 4,300 yesterday, after falling to below 1,000 a day for much of June and July.
Bailey: ‘The hard yards are ahead of us’
He said the new wave of coronavirus infections “does reinforce the downside risks” to the Bank’s economic forecasts. Bailey said that “the hard yards are ahead of us”.
The Bank had been upbeat about the recovery in the second half of the year, saying it was better than expected. The BoE predicted in August that the UK economy would shrink by an enormous 9.5 per cent this year before rebounding quickly with nine per cent growth in 2021.
But Bailey reassured the company bosses on the webinar, saying: “The Bank of England is going to do everything we can do, within our remit and within our powers, to support the people and the businesses of this country. And we will do that.”
He added: “We’ve used asset purchases and quantitative easing very aggressively. It was the right thing to do. I believe that it had a very positive effect in the spring.
“We are still undertaking qe so it is a tool in our box. We have looked hard at the question of what scope there is to cut interest rates further, and particularly negative interest rates.” Yet he said his comments should not be read as suggesting negative rates will be put in place.