The Bank of England is going to take a crucial action in order to stop the crisis of COVID-19 that is effecting the economy of Britain. Last Thursday, they said that they are willing to start the bond-purchasing program if required.
The Bank of England states that they are not yet ready to assess the probable scale of the current situation. But, many agencies are describing the crisis as worse than the 2008 economical crisis.
The Central Bank carried out two separate emergency rate cuts at the running month that kept the rate of key interest at a low-record of 0.1%. The size of their currently extended bond-buying plan by $774 billion that is approximately 645 billion pounds.
Detailed Statement of Bank of England
They also said, if required, then the MPC can increase the purchasing of asset further. It might protect them from undue tightening in economical condition. They are working hard along with the Government.
Moreover, they are also trying to develop an important settlement for the British states. They are trying to pay salaries to the employees who are working for the state government. The workers who are self-employed are also on the list.
Statement of JP Morgan
JP Morgan is an economist of Allan Monks. According to him, there is a chance that all the bond-buying procedure will be completed within the first week of May. Although the entire process depends on the evaluation of the durability of the shock related to the time. He added that the budget of the England government might increase to 9% of GDP during the upcoming economical year. It is almost like an economical crisis. According to the Resolution Foundation, think tank, Bank of England might require to take a serious step as well as they need to purchase the bonds immediately.
According to the former administrative officer of Bank of England, if the current situation deteriorates, then it is necessary to plan for what’s going to happen. He also added that the Govt. of England is failing to adopt directly from the markets to fund measures needed to help the economy.
Statement of Andrew Bailey
Andrew Bailey is the Governor of Bank of England. He said that last week when the Central Banks make a strong decision of purchasing debt directly from the govt, it leads to uncontrolled inflation and spending.
According to Yates and Smith, the England Govt is now working along with the Bank of England. They should declare in advance that they will take a strong decision only if they are accountable, transparent, as well as temporary.
Bank of England said in Monday that there was a high double-digit fall in the sales of the clothing store. They notice this before closing the most non-essential businesses. The consultants reported that the clients are delaying the projects. At the same time, the bank also restricted the credit to the new borrowers.
According to the Bank of England, the duration and scale of the lockdown to economic activity is extremely unpredictable. It will be sharp as well as large for the current situation. But, it should ultimately prove temporary, particularly if business failures and job losses can be controlled.