London Lockdown Rumors Hit Markets, Says BOE’s Bailey

(Bloomberg) --

Bank of England Governor Andrew Bailey said speculation that London could be put into lockdown added to this week’s wild swings in markets.

While Boris Johnson’s government is considering tougher action to fight the spread of the coronavirus in the U.K. capital, it has denied it’s planning to seal off the city. The pound fell as much as 5% on Wednesday, reaching its lowest level against the dollar since 1985.

“There were rumors going in the market about this time yesterday, that we were going to get a lockdown in London and what would that be,” Bailey said Thursday after a surprise BOE interest-rate cut. “That did cause cause market pricing to start moving around more at that point. The government has been clear that that’s not the intention at this point.”

Bailey also spoke about the topic of closing down markets amid global turmoil. He said speculation about that is related to contingency measures by governments so severe that they would “make it very difficult for trading to happen.”

“At the moment, I don’t think that’s going to be the case,” he said.

He said the BOE actions are aimed at ensuring markets operate as smoothly as possible, and to “bring order back where it seems to be disappearing.”

“We must to everything we can to make sure markets are orderly, to perform their intermediation function,” he said.

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