Coronavirus: Bank of England announces interest rate cut to record-low 0.1%

Andrew Bailey

The Bank of England has slashed interest rates to a new historic low of 0.1% and unleashed another £200 billion to boost the economy in its second emergency move in just over a week to combat the coronavirus hit.

The new governor of the Bank of England Andrew Bailey - who only took over this week - said the measures would be temporary and are meant to meet the needs of the economy, but the severity of the measures call into question whether they will work well enough.

This includes a second interest rate cut in under two weeks.The central bank's Monetary Policy Committee held an extraordinary meeting on Thursday 19 March and decided unanimously to cut the headline interest rate by 15 basis points from 0.25% to 0.1%.

Markets reacted optimistically to the news, with the FTSE ending the day up 1.4% and the pound rising against the dollar.

"We have to take into consideration what the likely scale of government financing is, because that's clearly going to amplify through the markets", Bailey told reporters.

Following the latest BoE action, sterling jumped 1.0 per cent to $1.1719, having hit the lowest level for 35 years on Wednesday as markets doubted enough was being done by the United Kingdom government and BoE to address the fallout.

Boris Johnson shuts down all pubs, restaurants in United Kingdom coronavirus fight
"The single best present that we can give is to spare them the risk of catching a very risky disease". But then he said: "I will certainly be sending her my very best wishes and hope to get to see her".

This follows Chancellor Rishi Sunak unveiling fresh measures to support businesses during the coronavirus crisis, including a £330bn loan pledge, £20bn in other aid and a moratorium on business rates.

"We have already seen easy-access rates fall since the 0.50% base rate reduction on March 11 and product cuts are still filtering down from providers".

Britain's authorities this week ramped up its makes an attempt to sluggish the unfold of coronavirus, urging individuals to keep away from assembly in bars and eating places and shutting faculties from Friday.

Bailey said rumours about a lockdown in London exacerbated Wednesday's chaos in British markets and he reiterated his opposition to closing trading.

The £200bn of quantitative easing will buy Government bonds and corporate debt, and will take the total QE in the system up to £645bn.

"There will be no query that the financial and monetary authorities are throwing every part they'll at this drawback to assist companies and households, cushion demand as a lot as is fairly attainable, and to cut back the long-term hit to provide".

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