The Bank of England still has “a lot of ammunition” to tackle the economic effects of the growing coronavirus epidemic, despite the country’s already low interest rates, governor Mark Carney said Thursday.
Carney, whose term at the head of the central bank ends in 10 days, said the BoE had more tools at its disposal than when it tackled the global financial crisis in 2008.
Beyond tightened banking regulations, with higher levels of equity now demanded from institutions than twelve years ago, Carney added that the key interest rate, currently at 0.75 percent could be further lowered by 75 basis points to zero.
The Bank of England could also use “the combination of asset repurchases and a special mechanism for granting liquidity,” Carney told an audience at University College London.
The reassuring tone is a change from the one Carney adopted in early January when he said: “It’s generally true that there’s much less ammunition for all the major central banks than they previously had.”
On Tuesday Carney insisted that the Bank of England would “take all necessary steps” to support the UK economy from the fallout of the novel coronavirus which has skilled over 3,300 people worldwide.
Britain’s chief medical officer announced the first UK fatality on Thursday.
Carney’s comments on Tuesday came just hours before the US Federal Reserve led the charge in the global response to the growing economic risk posed by the coronavirus, slashing its key interest rate by a half point to a range of 1.0-1.25 percent, its record low.
