Bank of England Meets Against Pandemic


The new Governor of the Bank of England (BoE), Andrew Bailey, on March 16, 2020 in London (POOL / Tolga AKMEN)

The Bank of England is set to unveil its latest monetary policy decisions on Thursday after releasing heavy artillery last week in an attempt to stem the financial shock from the coronavirus pandemic.

“Perhaps they will explain more precisely how they are going to proceed,” commented to AFP Howard Archer, analyst for EY Item Club, about the minutes of the meeting, which will be published at 12:00 GMT.

He does not expect any new measures but that the bank will once again insist that it is ready to do more if necessary.

Last Thursday, the Bank of England (BoE) took the markets by surprise by announcing a reduction in its key interest rate by 0.15 percentage points, to fix it at 0.1%, a historic low, in order to counter the expected economic impact of the pandemic. At the start of the month, it was still 0.75%.

Judging the situation “clearly unprecedented”, the new governor of the BoE, Andrew Bailey, who took office ten days ago, had then judged that the institution could not afford to wait for the publication of economic data on the impact of the epidemic.

“It will be too late,” he told reporters during a conference call.

“Things are moving too quickly” to wait for the meeting scheduled for next week, he added.

If the economic consequences of the pandemic remain to be measured, activity already collapsed in March in the United Kingdom, according to a first estimate of the PMI index published Wednesday. It fell to its lowest level since the publication of the first data in January 1998.

The institution also decided last week to increase its asset repurchase program by 200 billion pounds (about 216 billion euros) to bring it to 645 billion, she said in a statement.

The spread of the Covid-19 epidemic has accelerated considerably in recent days in the United Kingdom, where more than 8,000 people have been officially infected and more than 400 people have died. Prince Charles, heir to the throne, has notably been tested positive.

Since Europe became the epicenter of the coronavirus pandemic, many countries, including the United Kingdom since Monday evening, have imposed population containment, paralyzing economic activity and forcing central banks to take action. exceptional measures.

On Wednesday, the BoE and the Treasury issued a letter instructing banks to “maintain and scale up lending despite economic uncertainty”. To prevent the financial machine from seizing up, the Bank of England also eased solvency rules and launched a program to make it easier for financial firms to access cash.

ktr / ved / sl / ybl

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