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The demand impact of the coronavirus outbreak, which is expected to be larger than the supply impact in the near term, is a consideration for the monetary policy, Bank of England Governor Mark Carney said while testifying before the UK Parliament’s Treasury Select Committee (TSC) on Tuesday.

Key takeaways

“We have run stress tests in the past couple of years modelling the effect of a severe slowdown in China and Hong Kong.”

“There will be elements of supply disruption from coronavirus but not permanent effect on supply.”

“We do not want viable businesses to go out of business due to coronavirus.”

“We want banks to be able to use balance sheets to support customers during coronavirus.”

“The BoE is looking at facilities to support lending to small businesses.”

“Will try to have a response that complements that of UK Finance Ministry.”

“Should expect a response that has a mix of fiscal and central bank elements.”

“A powerful and timely global economic response to coronavirus is expected.”

GBP/USD reaction

The GBP/USD pair edged higher in the last minutes and was up 0.4% on the day at 1.2802 at the time of press.