This is, above all else, a matter of human health and welfare. The front line of combatting the challenges of Covid-19 comprises the extraordinary efforts of NHS health professionals, Public Health Officials and volunteers across the country, as well as the exceptional support by the FCO to UK citizens abroad. We are fortunate in this country to have the infrastructure, expertise and dedication in public health that we do. The Bank of England’s role is to help UK businesses and households manage through an economic shock that could prove large but will ultimately be temporary. The Bank will take all necessary steps to support the UK economy and financial system, consistent with our statutory responsibilities. Our policy arsenal includes monetary policy instruments, special liquidity facilities, and macroprudential tools. We are also coordinating with HM Treasury to ensure that any initiatives are complementary and that they will collectively have maximum impact, consistent with our independent responsibilities. And lines of communication are wide open with our international colleagues at the G7, G20 and the IMF. While there will be differences in the exact timing and form, the collective impact of our efforts will be both powerful and timely. The Bank are monitoring the situation closely across all our functions and ensuring all necessary contingency plans are in place in the private financial sector and at the Bank of England itself.
In 1998, the early days of the Great Moderation, GDP-at-risk was benign – that is, even in a tail outcome the level of GDP was expected to be higher three years out. Through the next decade, though central case GDP grew steadily, risks were gradually building. By 2007 a fifth percentile draw was expected to leave GDP 3.5% lower three years out. As the crisis hit, GDP-at-risk shrunk rapidly as risks crystallised. Since then, risks have been relatively stable reflecting post-crisis balance sheet repair, the implementation of comprehensive macroprudential frameworks, and relatively subdued economic activity (Chart 6). Chart 6: Risks grew during the Great Moderation but are now standard 2007  Latest  Probability density  1997  0.14 0.12 0.10 0.08  Risks increasing  0.06 0.04 0.02 0.00  -10  -8  -6  -4  -2  0  2  4  6  8  Cumulative GDP growth over 3 years (%)  10  12  14  [Chart 6 uses same data as Chart 5. For each distribution, shaded area denotes the tail; the line marks the 5th percentile]. 14  All speeches are available online at www.bankofengland.co.uk/news/speeches  14  2. Impact on growth The second set of differences between macroprudential and monetary policy concern the interaction between their objectives and growth in the short and long terms. Both monetary and macroprudential objectives apply at all times.