UK interest rates slashes again to limit economic impact of Covid-19

The Bank of England has cut interest rates to their lowest ever levels in a bid to limit the economic impact of the coronavirus on the UK economy.

The Bank of England (BoE) has slashed interest rates again on Thursday in a bid to limit the economic impact of the coronavirus on the UK economy.

The BoE lowered interest rates from 0.25% to 0.1% - its lowest level in the Bank’s 325-year history.

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BoE increases bond holdings

The BoE also said that it will increase its holdings in UK government and corporate bonds by £200 billion as part of emergency measures to lower the cost of borrowing and reduce the economic impact of Covid-19.

The emergency measures by the BoE have been mirrored by other central banks around with the world, with the US Federal Reserve also cutting rates to near zero to shore up the US economy against the coronavirus.

Last week, the BoE announced a 0.5% cut in rates to 0.25%, while the UK Chancellor Rishi Sunak unveiled a £350 billion rescue package aimed at helping UK businesses cope with the economic fallout caused by the virus.

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BoE admits further measures needed

Despite the BoE slashing interest rates twice over the last two weeks to help support the UK economy, the central bank admitted ‘a further package of measures was warranted’.

‘The spread of Covid-19 and the measures being taken to contain the virus will result in an economic shock that could be sharp and large, but should be temporary,’ the BoE said.

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