March 5, 2020 / 5:44 PM / a month ago

Bank of England assessing scale of virus hit to UK economy: Carney

LONDON (Reuters) - The Bank of England is trying to gauge the scale of the hit to Britain’s economy from the spread of coronavirus before any decision to provide more stimulus, Governor Mark Carney said on Thursday.

FILE PHOTO: The Governor of the Bank of England, Mark Carney, speaks to the Scottish Economics Forum, via a live feed, in central London, Britain March 2, 2018. REUTERS/Peter Nicholls/File Photo

Unlike the U.S. Federal Reserve and the Bank of Canada, both of which cut rates this week, the BoE says it needs a clearer picture before taking any action.

“The MPC (Monetary Policy Committee) is assessing the economic impacts and considering the policy implications of various possible scenarios,” Carney said in a speech at University College London.

Those implications included supply chain disruption which could hit demand via cash flow problems, the cost and availability of finance, and a hit to confidence, he said.

“The Bank will take all necessary steps to support the UK economy and financial system, consistent with our statutory responsibilities,” he said.

“Our policy arsenal includes monetary policy instruments, special liquidity facilities, and macroprudential tools.”

Carney added in a question and answer session that the BoE still had a lot of ammunition to tackle a downturn.

The BoE was coordinating with Britain’s finance ministry “to ensure that any initiatives are complementary”, he said.

British finance minister Rishi Sunak is due to announce a tax-and-spending budget statement on March 11.

“No big clues on immediate policy moves in Mark Carney’s last speech ... (which) leaves just a hint that MPC & Treasury could co-ordinate around next week’s Budget,” Simon French, chief economist at Panmure Gordon, said on Twitter.

Carney is due to stand down as governor on March 15.

Carney’s successor, Andrew Bailey, said on Wednesday that he wanted to see more evidence of the impact of the virus when asked by a lawmaker if he favored a rate cut before March 26, the date of the MPC’s next scheduled policy announcement.

Reporting by Andy Bruce and David Milliken; writing by William Schomberg

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