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Bank of England Cuts Interest Rates to Record Low of 0.25%

The Bank of England has lowered the base interest rate to 0.25% - a 322-year record low for the United Kingdom.

Bank of England Cuts Interest Rate to 0.25%

The Bank of England has lowered the base interest rate to 0.25% - a 322-year record low for the United Kingdom.

As was widely expected in the run up to this afternoon's announcement, the Bank of England (BoE) has cut UK interest rates for the first time since March 2009, lowering rates from 0.5% to 0.25%, with a unanimous vote from the Monetary Policy Committee (MPC).


In addition to cutting interest rates, the BOE also announced an additional £60 billion quantitative easing (QE) package – extending the QE programme currently in place to £435 billion in total.


Furthermore, £10 billion in electronic cash will be created to acquire corporate bonds from firms – making a substantial contribution to the UK economy.


A new scheme has also been created to provide as much of £100 billion of new funding to banks. Under this new “term funding scheme” the Bank will create new money to provide loans to banks at interest rates close to the base rate of 0.25%.


Following the announcement, the value of sterling also fell, falling by more than 1.5 cents against the US dollar to $1.315 in the immediate aftermath of the decision.


Speaking to the press shortly after the announcement was made, governor of the Bank of England, Mark Carney, said: 'The UK can handle change. It has one of the most flexible economies in the world. It has a deep reserve of human capital ... and its people are admired the world over for their strength under adversity'.


Directly addressing the measures implemented by the BoE today, Mr Carney also said they were aiming to 'reduce uncertainty, and blunt the slowdown' with the decisions made by the MPC being described as 'timely, coherent and comprehensive'. He also added that all of the measures seen today could be expanded in future if necessary, including further cuts to the base interest rate.

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