Bank of England Announces Emergency Coronavirus Rate Cut

Bank of England, the central bank of the United Kingdom, has carried out an emergency cut in the base interest rate in light of the risks associated with coronavirus.

According to an announcement published on March 11, the rate was reduced by 50 basis points, to 0.25%.

“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,” writes the Bank of England. “Although the disruption arising from Covid-19 could be sharp and large, it should be temporary. Such economic disruption should have less of an impact on the core banking system than recent stress tests run by the Bank have shown the system can withstand. Those stress tests demonstrated that banks would be able to continue to lend to businesses and households even while absorbing the effects of substantial, prolonged economic downturns in both the UK and the global economies, as well as falls in asset prices much larger than experienced in recent weeks.”

Last week, the US Federal Reserve also announced an emergency rate cut of 50 basis points in connection with the spread of coronavirus. In Italy payments for the mortgages are to get suspended.

Author: Marko Vidrih

Featured image credit: Picfair.