An emergency cut in interest rates has been announced by the Bank of England in a bid to boost the economy during the coronavirus outbreak.
Rates where reduced from 0.75% to 0.25%, the lowest level in history.
The announcement comes prior to the Budget tomorrow, where the Chancellor is expected to take further measures to support growth and jobs. The Bank of England is looking at freeing up billions of pounds of extra lending power to help banks support UK firms.
The Bank of England’s outgoing governor, Mark Carney said members of the government had seen a sharp fall in trading conditions which included lower spending on non-essential goods. The Bank of England’s role is to help households and UK businesses manage through an economic shock and this should be a temporary measure.
Carney said: “The UK economy could shrink in the next few months and the damage the coronavirus could cause is still unclear”. The last time the Bank of England made an emergency cut in interest rates was October 2009. Carney said: “If we act now and target support there is no reason for it to be as bad as it was back in 2008”.
Given coronavirus, oil price war and more, expect more stimulus from both the Bank of England and many other Central Banks. Expect more stimilus in the form or quantititative easing and government spending in the Budget tomorrow.