The British pound has reach its highest level in more than a week against it’s US counterpart after comments by incoming Bank Of England governor Andrew Bailey to lawmakers regarding the central bank’s stance on interest rates and that they should wait until the situation becomes clearer on hw the coronavirus is affecting the British economy.
The UK has not followed in the footsteps of the US, Canada and Australia who in recent saw their central bank’s cut interest rates by as much a 50 basis points to boost the economies which have suffered drastically over the effects of the virus
"I think what we need frankly is more evidence than we have at the moment” Mr Bailey said regarding the state of the British economy.
“We have got a building picture of evidence. The Bank of England is working extremely hard on it. I have been engaged on it this week, and I think then we can reach our judgment." He added.
It probably a good ploy by the Bank of England to leave rates on hold for the time being as they now have a chance to observe the effectiveness of rate cuts in the United States, Australia, Canada and Europe in the run up to the March 26 Monetary Policy Committee meeting.
Although the BOE has left rates on hold for now, some say it will only be a matter of time before they have to jump on board as the virus spreads and threaten to push the entire world into some sort of global recession.
"What was largely a Chinese issue just a month ago, has turned into a global crisis that threatens to throw the world economy into recession. The growth of the virus may have seemed relatively gradual outside of China, yet the growth in cases outside the country has actually been an incredible 6600% over that timeframe. says Joshua Mahony, Senior Market Analyst at IG.
We are at a tipping point, where a similar month of growth for the virus will likely spark a global panic and bring severe economic consequences that have yet to be realized," he added.
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