LONDON (Reuters) - Central banks can do little to offset economic shocks that affect the ability of businesses to meet customer demand, Bank of England Deputy Governor Jon Cunliffe said when asked how to respond to the effect of the coronavirus.
“If it’s a pure adverse supply shock, there is not much monetary policy can do,” he said on Thursday.
Judging the right policy response to economic shocks that reduced both household demand and the economy’s capacity to meet it was tricky, he added.
“In a disruptive shock, you won’t know what is supply and demand for some time.”
European Central Bank board member Isabel Schnabel earlier told the same panel, hosted by Barclays in London, that the ECB was “very worried” about the virus’s potential impact.
Reporting by David Milliken, editing by Dhara Ranasinghe