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Bank of England won't print more money to help tackle coronavirus – Governor Andrew Bailey

But Andrew Bailey said the Bank of England would “not hesitate to take all necessary actions” to shield Britain’s economy from the impact of the coronavirus pandemic. The central bank boss said the UK will not fall into an inflationary spiral and resort to irreversibly printing more money to allow the government to run up a bigger deficit because it would “damage credibility on controlling inflation”.

He said the bank would reject ideas of “monetary financing” – where central banks buy the government bonds of their country – to boost the economy as the nation tackles the coronavirus pandemic.

Mr Bailey said the world faced a “time of great uncertainty” but he would oppose any calls for the BoE to print money simply to help the government.

Writing the Financial Times, Mr Bailey said: “Using monetary financing would damage credibility on controlling inflation.

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Coronavirus news: Andrew Bailey has said more money will not be printed (Image: PA)

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Coronavirus UK: The Bank of England has been urged to print more money (Image: GETTY )

“It would also ultimately result in an unsustainable central bank balance sheet and is incompatible with the pursuit of an inflation target by an independent central bank

The idea of central banks helping governments to spend more using monetary financing, whereby a central bank prints new money for governments to use rather than the governments acquiring money through taxation or borrowing has raised concerns about a rise in inflation in the future.

It has even drawn parallels with the disastrous hyperinflation of 1930s Germany and 1990s Zimbabwe.

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Coronavirus UK: Britain is on lockdown (Image: GETTY)

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The BoE last month ramped up its bond-buying programme by a record £200 billion, similar to moves by the Federal Reserve and the European Central Bank as central banks around the world scrambled to limit a deep recession.

The next day, Chancellor Rishi Sunak announced the British state would pay 80 percent of the wages of workers who are temporarily laid off by companies, in the hope of getting them back into work quickly when the crisis abates.

That historic step was part of a series of emergency measures that will cost the government at least £60billion at a time when it will also suffer a plunge in tax revenues.

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Coronavirus UK: The Government is under pressure as the UK economy is left hurt by coronavirus (Image: GETTY )

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Coronavirus UK: Chancellor Rishi Sunak announced a rescue package (Image: GETTY )

But Mr Bailey added: “This type of reserve creation has been linked in other countries to runaway inflation.

“That is because it could undermine a central bank’s ability to control monetary conditions over the medium term.”

When the BoE announced the expansion of its bond purchase plan to £645 billion on March 19 – most of it for government bonds – Mr Bailey stressed he was not abandoning the long-standing concerns of central bankers about monetary financing “because history tells us where that leads”.

The UK is on lockdown amid the coronavirus pandemic (Image: EXPRESS)

Mr Bailey said the BoE remained in full control of how and when the expansion of its reserves to buy bonds is unwound and that the central bank would not allow its 2 percent inflation target to be threatened.

He said: “If the recent expansion of bond buying appears to threaten that goal, the MPC (Monetary Policy Committee) can react.

“The BoE will not hesitate to take all necessary actions both to support British businesses and households through this period of uncertainty and to ensure inflation is consistent with the 2 percent target in the medium term.”

The UK has entered its third week of a nationwide lockdown as part of measures to try and contain and eventually slow the spread of the killer virus.

The public have been ordered to stay at home, and people going out have been warned to follow a two-metre social distancing advice

But the lockdown has forced businesses across all sectors to close their doors which in some cases, has cost them several millions of pounds in the process.

Millions of jobs have also been lost across most sectors, including leisure and hospitality, leading Britons to fear for their long-term financial futures.

The Government has already pledged hundreds of billions of pounds to help businesses and workers heavily impacted by the coronavirus pandemic, as highlighted in Chancellor Rishi Sunak’s first Budget last month.

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