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Governor Mark Carney speaks at the Bank of England's Monetary Policy Report press conference in the City of London on Jan. 30, 2020.

POOL/Reuters

Bank of England Governor Mark Carney said policy-makers around the world were working on a “powerful and timely” response to the economic hit from coronavirus which has raised fears of a new global recession.

“The lines of communication globally between central banks are wide open, the lines of communication between ourselves and the Treasury are operating exceptionally well,” Carney told lawmakers on Tuesday.

“It is reasonable to expect a response that reflects a combination of fiscal measures and central bank initiatives.”

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Policy-makers from the Group of Seven rich nations were due to hold a conference call on Tuesday.

Two G7 officials said the policy-makers would stop short of directly calling for new government spending or co-ordinated central bank interest rate cuts.

Carney said that while the measures would vary from country to country, they would have the common goal of providing bridging support for the economy.

“We are confident that collectively these measures both within jurisdiction and across jurisdictions will be both powerful and timely,” he said.

Carney, who is due to be succeeded as governor by Andrew Bailey in the middle of this month, said the shock to Britain’s economy from coronavirus could be “large but temporary” and the central bank’s top decision-making bodies had held a rare joint meeting to plan out what action might be needed.

“The Bank of England’s role is to help U.K. businesses and households manage through an economic shock that could prove large but will ultimately be temporary,” he said in a statement to lawmakers in parliament before addressing their committee.

“The Bank will take all necessary steps to support the U.K. economy and financial system, consistent with its statutory responsibilities.”

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Carney said he had discussed the coronavirus situation with new British finance minister Rishi Sunak – who is expected to announce higher public spending in a budget statement next week – and he was in regular contact with Britain’s FCA financial regulator and the BoE’s international peers.

“We are in frequent contact with our international peers, including at the G7, G20 and IMF,” he said.

Carney said the BoE’s monetary and financial policy committees and bank supervisory committee met jointly on Monday “to review a range of macroeconomic and financial system scenarios and their implications, and they will continue to meet as needed and will act as appropriate.”

He said “all necessary contingency plans” were in place at the BoE.

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