Bank of England cuts rate again to 0.1% to combat the economic impact of Coronavirus

The Coronavirus pandemic continues to hit the financial markets and economies at large as the world struggles to contain the fast spread of the flu-like virus that has so far infected over 1,55,000 people and has caused around 9,000 deaths.

In a recent development, the Bank of England (BoE) held an emergency policy meeting on Thursday that ended in a further reduction in interest rates to 0.1%. UK’s policymakers also voted in favor of ramping up the BoE’s bond-buying program. Thursday’s measures, according to the BoE, are directed at protecting the country against the economic
impact of the ongoing health emergency.

BoE Says Its Bond-Buying Program Will Expand By £645 Billion

Thursday’s rate cut marks a 15 basis points reduction from the previous 0.25% that the Bank of England announced earlier in March. On the bond-buying front, the BoE said that the program is likely to expand by £645 billion. UK policymakers had earlier set a target of a much lower £200 billion for the bond-buying program.

As per BoE’s statement on Thursday, the additional asset purchases would primarily be directed at the UK government bonds. The central bank is committed to completing the aforementioned purchases as soon as operationally possible.

The United Kingdom is not the only once to have taken an aggressive stance in its economic battle against the Coronavirus pandemic. Multiple other central banks have also resorted recently to adding huge fiscal stimulus to support the economy through the challenging time. The U.S Federal Reserve and the Australian Reserve Bank, for instance, have announced a second emergency rate cut earlier this week.

PM Johnson Orders Schools To Temporarily Shut Down

So far, the UK has declared 2,644 confirmed cases of the flu-like virus and 128 deaths. The infected also includes the UK’s health minister Nadine Dorries. PM Johnson also placed a travel ban and ordered schools to temporarily shut down to minimize the risk of the deadly virus. Multiple businesses also suspended operations to combat Coronavirus.

Earlier this week on Tuesday, UK’s finance minister Rishi Sunak announced a £330 billion worth of financial support in the form of loans for businesses that have taken the largest blow amidst the Coronavirus crisis.

Sterling caught traction in the forex market following BoE’s rate cut on Thursday. GBP/USD climbed from a low of 1.1475 to a daily high of 1.1790. Part of the gain, however, was lost later in the day with Cable currently exchanging hands at 1.1670.