Bank of England cuts main interest rate to 0.25 pct

APD NEWS

text

The Bank of England cut its main interest rate from 0.75 percent to 0.25 percent on Wednesday as part of a package of measures to cushion the impact of COVID-19.

At a special meeting which ended on Tuesday, the Monetary Policy Committee (MPC) voted unanimously to reduce the rate by 50 basis points to 0.25 percent, according to a statement released by the bank.

The cut is expected to support business and consumer confidence during the epidemic, bolster the cash flows of businesses and households, reduce costs and improve the availability of finance.

"The Bank of England's role is to help UK businesses and households manage through an economic shock that could prove sharp and large, but should be temporary," the bank said, adding that "a comprehensive and timely package of measures" will help prevent a temporary disruption from causing longer-lasting economic harm.

The bank warned that economic activity is likely to weaken "materially" in the country over the coming months, as both demand and supply will be affected by the COVID-19 outbreak.

"Additional funding will be available for banks that increase lending, especially to small and medium-sized enterprises (SMEs)," the bank said.

The emergency rate cut comes hours before the British government is expected to unveil further measures in its budget aimed at tackling the COVID-19 epidemic.

Chancellor of the Exchequer Rishi Sunak said ahead of the budget that the National Health Service will get "whatever resources it needs" to cope with the situation.

As of Tuesday, the number of confirmed cases in Britain had risen to 382, with six dead.

Conservative MP Nadine Dorries, a junior health minister, became the first UK MP to test positive for the disease and has been self-isolating at home since.