
Policy makers delivered a half-point reduction to take their key rate to 0.25 per cent/Bloomberg
by BloombergThe Bank of England (BOE) has unveiled stimulus including its first emergency interest-rate cut since the financial crisis, a move coordinated with the government’s fiscal response to prevent the coronavirus outbreak from crippling Britain’s economy.
Policy makers delivered a half-point reduction to take their key rate to 0.25 per cent, introduced a new programme to provide easy and cheap credit and reduced a special capital buffer to give banks even more room to lend.
Governor Mark Carney said the coronavirus effect should be short-lived but he and his successor, Andrew Bailey, made clear that the BOE has space if it needs to do even more.
Carney said that these measures will help keep firms in business and people in jobs, and they will prevent a temporary economic disruption from causing long-term harm, adding that this is a big package.
What may appeal to investors is that the BOE not only delivered a large rate cut like the US Federal Reserve, but also targeted aid to businesses and banks which could feel fallout from a drop in demand because of the virus.
The UK response also stands out with the level of coordination between the central bank and the government—a synchronisation which may serve as a model for other economies.
Chancellor of the Exchequer Rishi Sunak announced GBP 30 billion ($34 billion) of fiscal stimulus and pledged to spend GBP 600 billion by 2025 on a massive infrastructure programme, alongside measures to help businesses and the National Health Service weather the disruption from the disease.
MOST READ
ECONOMY
Oman plans to raise $1 billion to plug its...ECONOMY
Refinitiv partners with Complyfin in the UAEECONOMY
Abu Dhabi plans AED 10 billion in PPP tendersECONOMY
US weighs higher tariff ceilings in a bid for...ECONOMY
GCC oil wealth could be over by 2034 without...ECONOMY
Jordan agrees $1.3 billion IMF programmeECONOMY
Expo 2020 Dubai to contribute 1.5 per cent to...