MNI INSIGHT: Carney Opens Door To BOE Easing At End March Meet

By David Robinson

     LONDON (MNI) - Bank of England Governor Mark Carney's detailed remarks to

lawmakers Tuesday and the subsequent stand-alone U.S. Federal Reserve rate cut

point to easing at the MPC's regular end March meeting rather than any emergency

move.

     There has been much speculation about co-ordinated policy action from

central banks but with the Fed acting ahead of other G7 countries and with the

UK Treasury working on the details of its fiscal stimulus for the March 11

Budget there is a strong case for the BOE MPC to wait until its regular March 26

meeting.

     Carney told the Treasury Select Committee that "The lines of communication

globally between central banks are wide open. The lines of communication between

ourselves and HMT are operating exceptionally well" and that it was reasonable

to anticipate a mix of fiscal and central bank initiatives.

     He added, however, that "Across jurisdictions there'll be some differences

in the exact form and timing of those measures."

     The likely timing of the UK fiscal response is unique. The new Treasury

head, Chancellor of the Exchequer Rishi Sunak, was already wrestling with what

fiscal stimulus could be delivered in the budget before the spread of

coronavirus accelerated.

     Carney repeated the MPC's mantra that monetary policy should take fiscal

policy into account, rather than moving in anticipation of it and he said that

the MPC has "had sight" of the Treasury measures. Moving early would raise

uncomfortable questions about policymakers acting on non-public information.

     --COORDINATION

     Asked explicitly if the MPC could take action before its late March meeting

Carney said "I don't want to bind the hands of the committee in terms of any

specific timing."

     Carney is set to hand over the reins to his successor, Andrew Bailey, in

mid-March and he said that "The transition will have no impact on the conduct of

policy."

     The MPC is set to go into its pre-policy announcement quiet period on March

18, when its pre-meeting discussions and assessment of the economic analysis

will begin. Unless the coronavirus shock spirals, the MPC is likely to complete

its regular economic assessment before acting.

     Carney's line was that policymakers internationally were working towards a

common goal, even if they use differing tactics and timing to get there.

     "The response will share a common goal which is to achieve this bridging,

supporting the economy through a potentially challenging period. We're confident

collectively that these measures, both within jurisdiction and across

jurisdictions, will be both powerful and timely," he said.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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