Haldane: BoE Considers Quantitative Easing

The Bank of England (BoE) could consider lowering the cost of borrowing, the bank’s Chief Economist, Andy Haldane, said on Monday.

The move could come as a way of adapting to a possible economic shock due to the COVID-19 crisis.

“Roughly half of the roughly 25% fall in activity during March and April has been clawed back over the period since,” Haldane told The British parliament.

“We have seen a bounceback. So far, it has been a V. That, of course, doesn’t tell us about where we might go next.”

The BoE will also have to consider how to tackle corporate debt issues, with quantitative easing seen as a possible option, as well as forward guidance.

Haldane expects 25% of companies in the UK to face over-leverage problems.

The British central bank is also considering lowering interest rates into a negative range, however, this would come with possible downsides, according to the chief economist.

“There has been some fracturing of domestic and global supply chains, raising the costs of some goods and services. And it is possible a higher long-term equilibrium rate of unemployment could cause the earlier re-emergence of wage pressures.”