The Bank of England has reduced the bank rate by 15 basis points to 0.1 percent amid the challenges associated with COVID-19.
The announcement comes just over a week after the Bank of England cut the bank rate by 50 basis points to 0.25 percent from 0.75 percent in an emergency move to help UK businesses and households deal with the disruption associated with COVID-19.
In addition to cutting the rate back further, it has today been voted by the Monetary Policy Committee (MPC) to increase the Bank of England’s holdings of UK government bonds and sterling non-financial investment-grade corporate bonds.
This will be increased by £200 billion to a total of £645 billion, financed by the issuance of central bank reserves.
It has also been agreed that the Bank of England should enlarge the term funding scheme with additional incentives for small and medium-sized enterprises, also financed by the issuance of central bank reserves.
The bank explained that the majority of additional asset purchases will comprise UK government bonds.
According to the bank, the purchases announced today will be completed as soon as it is “operationally possible, consistent with improved market functioning”.
In its announcement, the bank stated: “The spread of Covid-19 and the measures being taken to contain the virus will result in an economic shock that could be sharp and large, but should be temporary.”
Meanwhile, the bank will issue further guidance to the market in due course with the next regularly scheduled MPC meeting due on 25 March.
According to the UK Government website, as of 9am on 18 March 2020, 56,221 people have been tested in the UK, of which 53,595 were confirmed negative and 2,626 were confirmed positive.
It also noted that 103 patients in the UK who tested positive for COVID-19 have died.
