The Bank of England unexpectedly lowered its base interest rate in an attempt to support the British economy amid the spread of coronavirus in the country. Yesterday, the Monetary Policy Committee voted unanimously to lower the rate by 50 basis points to 0.25%. The regulator did not change the volume of the government bond purchase program (435 billion pounds) and kept the purchase volume of corporate bonds at 10 billion pounds. At the same time, the central bank lowered its countercyclical capital buffer for banks from 1% to 0% and launched a new small business lending support scheme. The regulator noted that although the extent of the economic shock from COVID-19 is very uncertain, business and production activity in the country may significantly weaken in the coming months. This emergency cut in the Bank of England rate was the first since the global financial crisis of 2008. As a result of this step, the rate returned to a record low level achieved after the Brexit referendum in 2016.
