March 16, 2020 / 12:22 PM / 24 days ago

New BoE Governor Bailey promises more 'prompt action' when needed

LONDON (Reuters) - New Bank of England Governor Andrew Bailey promised that the central bank would deliver further “prompt action” when needed to help Britain’s economy weather the hit from the global coronavirus outbreak.

Bank of England Governor Andrew Bailey poses for a photograph on the first day of his new role at the Central Bank in London, Britain March 16, 2020. Tolga Akmen/Pool via REUTERS

Bailey, who succeeded Mark Carney as governor on Monday, told BBC News that the BoE was “very keen” to ensure short-term damage to the economy did not permanently damage Britain’s longer-term growth prospects.

“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,” he said in his first public comments since taking over as governor.

On Wednesday last week, the BoE launched emergency credit measures to prevent a wave of corporate bankruptcies, and cut interest rates to 0.25% from 0.75%.

Britain’s new finance minister Rishi Sunak announced a surge in public spending a few hours later.

Investors are watching for signs that the BoE will take further measures to help the world’s fifth-biggest economy before its next scheduled announcement on March 26, even though its ammunition has been reduced by last week’s action.

Economists say the BoE could trim rates to just above zero and expand its purchases of government bonds and corporate debt.

Some have even raised the prospect of more radical policies such as “helicopter money” — giving newly created money directly to households — depending on the severity of the downturn.

In his interview with the BBC, Bailey said a move on Sunday by six central banks, including the BoE, to provide cheap U.S. dollar funds to the financial system came in response to some “pretty big dislocations” in financial markets.

“We’re going to see how that works its way through the markets today (and) in the coming days to see what the effect is, but I would emphasise that this is strong coordination among central banks.”

The Fed cut its main lending rate to just above zero on Sunday.

Reporting by Andy Bruce, editing by David Milliken and William Schomberg

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