UK Central Bank Emergency Cuts Base Rate by 0.5%p in Response to COVID-19

[Asia Economy Reporter Kwon Jae-hee] The Bank of England (BoE) cut its benchmark interest rate by 0.5 percentage points on the 11th (local time) as an emergency measure against the spread of the novel coronavirus (COVID-19).

According to Bloomberg News, the BoE's Monetary Policy Committee announced in a statement that it approved lowering the benchmark interest rate from 0.75% to 0.25%. This is the first rate cut by the BoE since August 2016.

Additionally, the BoE announced the introduction of a new funding support scheme for small and medium-sized enterprises affected by COVID-19. The plan is to provide funding over four years, spread across the next 12 months. The funds will be raised through the issuance of BoE reserves.

The BoE stated, "Although the scale of the economic impact caused by COVID-19 is uncertain, it is highly likely that the UK economy will deteriorate substantially over the coming months."

Meanwhile, Andrew Bailey, the head of the UK Financial Conduct Authority (FCA), who will assume the position of BoE Governor on the 16th, appeared before the Parliamentary Treasury Committee on the 4th and emphasized that "at this point, we need more evidence to justify lowering interest rates," expressing a negative stance on rate cuts and stating that it is necessary to wait until the economic impact becomes clear.

This content was produced with the assistance of AI translation services.