Britain's economy could be facing a slower recovery from its deep coronavirus slump than the Bank of England suggested this month and all stimulus options, including sub-zero interest rates, should be considered, a BoE deputy governor said.
LONDON - Britain’s economy could be facing a slower recovery from its deep coronavirus slump than the Bank of England suggested this month and all stimulus options, including sub-zero interest rates, should be considered, a BoE deputy governor said.
While stressing the huge uncertainties about the outlook, the central bank said the economy could get back to its pre-pandemic size by the second half of 2021.“But there will be other mechanisms for scarring,” he said. “But could it persist for a bit longer? That’s an open question and these are very, very early days.”Most economists expect it will expand further its war chest for buying bonds, most of them issued by Britain’s government, which is borrowing heavily to prop up the economy.
Several of the multi-billion pound programmes were launched as the coronavirus crisis escalated and are now run by BoE staff who are largely working from home. Ramsden said the BoE still had “quite a lot of headroom” to buy more gilts, but the pace of purchases could be adjusted.
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