LONDON, Apr 5 (.) – The Bank of England will not print money irreversibly to finance an increase in government spending, while trying to protect the British economy from the crisis caused by the coronavirus, its Governor Andrew Bailey said on Sunday.
The BoE last month increased its bond purchase program by a record £ 200 billion ($ 245.2 billion), a step similar to that taken by the Federal Reserve and the European Central Bank in their attempts to limit the impact of a deep recession.
Recognizing that the world is facing a “time of great uncertainty,” Bailey said he will oppose any call for the Bank of England to print money simply to help the government.
“Using monetary financing would damage credibility in controlling inflation by eroding operational independence,” Bailey said in an opinion piece published by the Financial Times.
“Ultimately, it would also result in an unsustainable balance sheet for the central bank and would be inconsistent with an independent central bank’s pursuit of an inflation target,” he added.
When the Bank of England announced the expansion of its bond purchase plan to £ 645 billion on March 19, mostly government debt, Bailey emphasized that he was not ignoring the concerns of central bankers over monetary financing “because the history tells us where that leads. “
(Written by William Schomberg. Edited in Spanish by Rodrigo Charme)