The Bank of England has cut the United Kingdom’s base interest rate from 0.75 percent to 0.25 percent in response to the economic shock caused by the outbreak of the coronavirus disease.
The Bank’s Monetary Policy Committee (MPC) voted unanimously to reduce the bank rate by 50 basis points on Tuesday March 10. “The reduction in bank rate will help to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability, of finance,” said the Bank in a statement.
The MPC also voted unanimously for the Bank to introduce a new “term funding scheme” that will free up billions of pounds of extra lending power to help banks support struggling firms.
“When interest rates are low, it is likely to be difficult for some banks and building societies to reduce deposit rates much further, which in turn could limit their ability to cut their lending rates,”
