Money & Banking

Bank of England cuts rates to 0.25 per cent

Reuters LONDON | Updated on March 11, 2020 Published on March 11, 2020

Members of the Bank of England's Monetary Policy Committee voted to cut Bank Rate for the first time since August 2016.   -  Bloomberg

The Bank of England unexpectedly cut interest rates by half a per cent on Wednesday in a shock move to bolster Britain's economy against disruption caused by the coronavirus outbreak.

Members of the BoE's Monetary Policy Committee voted to cut Bank Rate for the first time since August 2016, to 0.25 per cent from 0.75 per cent, the central bank said in a statement. “Although the magnitude of the economic shock from Covid-19 is highly uncertain, activity is likely to weaken materially in the United Kingdom over the coming months,” the BoE said.

The BoE maintained its target for government bond purchases to 435 billion pounds and its corporate bond purchase target to 10 billion pounds. The BoE also introduced a new term funding scheme for small businesses. It will offer four-year funding over the next 12 months.

The central bank's Financial Policy Committee also lowered the counter-cyclical capital buffer for banks to zero from 1 per cent.

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Published on March 11, 2020
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