Ex-BoE's King warns against rate cuts to fend off coronavirus

A former Governor of the Bank of England cautioned economic authorities against simply resorting to blunt tools such as interest rate cuts and more government spending to protect the economy from the hit to activity levels from the coronavirus.

In remarks to BBC Radio 4, Mervyn King argued against Bank cutting interest rates or the Chancellor pursuing broad fiscal spending plans to counter the fallout from the coronavirus.

Instead, King said, Rishi Sunak should centre his efforts on short-term measures, including supporting firms whose cashflows are taking a hit.

"This virus and its economic impact are not amenable easily just to cuts in interest rates or fiscal expansion. It requires much more targeted measures."

Nonetheless, King went on to say that while the economic cost of the outbreak would be "significant", the consequences might be limited to the short-term.