Andrew Bailey has joined the Bank of England with a pledge to take “prompt action” over the growing coronavirus crisis if necessary.
Mr Bailey, formerly chief executive of the Financial Conduct Authority, took over the governor position from Mark Carney yesterday (March 16) against a backdrop of tumbling markets and a growing pandemic.
Speaking for the first time in his new role, Mr Bailey told the BBC he would take fresh “prompt action” whenever necessary to limit the long-term effect of the coronavirus crisis on the economy.
He also said the central bank would be “very, very focused” on the response to the coronavirus crisis, adding “we need to get through that period”.
Mr Bailey told the BBC: “There’s two parts [to the crisis’ effect on the economy]. First of all, of course, is how long Covid itself is going to go on for, obviously that's not something that as a central bank, we have an expertise in.
“We're working very closely with epidemiologists to understand that.”
Mr Bailey said the second part — which the BoE was “very keen” to avoid — was that the economic effect of the crisis was prolonged due to the damage to the economy.
He was speaking following the Federal Reserve’s decision to cut US interest rates to 0-0.25 per cent while the BoE and other central banks ensured the financial system had enough US dollars, and Mr Bailey called the coordinated action “a step forward”.
But markets were sceptical the fiscal stimulus will be enough to help firms.
The S&P 500 fell 12 per cent per cent in yesterday's trading, while the FTSE 100 tumbled 4 per cent and the Euro Stoxx 50 was down 4.2 per cent. But these markets are also reacting to the news of more widespread travel bans and rising case numbers across Europe.
Steve Carlson, chartered financial planner at Carlson Wealth Management, said: “The probability is that [the coronavirus crisis] is a production and demand issue which you cannot change by dropping interest rates.
“Andrew Bailey just needs to look after his bit. Ensure there is liquidity in the markets and help small businesses to bridge the gap.”
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