Coronavirus complicates new policymakers’ task

The drop back in equity prices this week heaps more pressure on the new head honchos at the Treasury and the Bank of England to deliver some measures to help mitigate the economic effects of the coronavirus. But while this will surely be the main focus of the Budget on Wednesday, the new Chancellor may still announce some increase in public investment. And although it would be unwise to rule anything out, we suspect the Bank of England will eventually favour a 0.25% interest rate cut supplemented with other more targeted measures to mitigate the effects of the coronavirus rather than the 0.50% cut the markets are increasingly expecting.