Bank of England’s Tenreyro says removing policy support too early could be costly

• Bank of England interest rate-setter Silvana Tenreyro said removing fiscal or monetary policy support for the economy too early after last year's coronavirus slump could have a damaging effect on the labor market.
• "One lesson that we learned from the financial crisis is that withdrawing policy support too early can be very costly," Tenreyro said in an online discussion hosted by Swedish think tank SNS. "Withdrawing it too early ... can lead to scarring effects on the labor market that would be very costly and slow down growth going forward," she added.
• The BoE last year cut rates to a record low of 0.1% and doubled the size of its bond-buying program to 895 billion pounds ($1.23 trillion). Tenreyro argued in late 2020 that the economy might benefit from cutting rates below zero.
• Since then, Britain has made fast progress with its COVID-19 vaccination program, raising the prospect of a bounce-back for the economy this year and in 2022.

(Source: Reuters)