Bank Of England Chief Urges Quantitative Easing Amid Recovery Warning

(Alliance News) - The governor of the Bank of England has warned Britain's economic recovery from ...

Alliance News 28 May, 2020 | 6:53AM
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(Alliance News) - The governor of the Bank of England has warned Britain's economic recovery from the coronavirus crisis will be tougher than expected, saying a fresh wave of money creation methods will be needed.

Andrew Bailey has shied away from idea of cutting official interest rates to below zero for the first time in the bank's 326-year history.

Instead, he says more economic support is likely to come in the form of quantitative easing – in which the bank buys government bonds from investors, pumping money into the economy in the process.

Since the crisis began in March, the bank has cut official interest rates to 0.1%, announced a GBP200 billion expansion of QE, made moves to ease the financial pressure on large companies and made it easier for banks to lend.

Bailey is wary, however, of going further by taking interest rates negative.

"We have signalled that we stand ready to do more within the framework of policies we have used to date," he wrote in The Guardian.

"And, in view of the risks we face, it is of course right that we consider what further options, such as cutting interest rates into unprecedented territory, might be available in the future. But it is also important that we consider very carefully the issues that such choices would give rise to."

Despite support measures already taken, official figures released on Wednesday showed the government was paying the wages of 8.4 million employees, out of a total labour force of 32 million.

By PA Reporter

source: PA

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