Bank of England cuts rates

The Bank of England (BOE) announced Wednesday an emergency cut to interest rates in an attempt to limit the economic impact from the new coronavirus. The announcement follows a similar decision by the U.S. Federal Reserve last week. The virus that began in China late last year has spread worldwide and is impacting all major economies, with flight cancellations, panic buying and strict quarantine measures in some cases.

The central bank has also announced a new term-funding scheme to support small and medium-sized companies, as well as new steps to help commercial banks lend more. As of Wednesday morning, the U.K. had 382 confirmed cases of the coronavirus, including the country’s health minister Nadine Dorries.

Data released last month showed that the U.K. economy stagnated in the last part of 2019. The decision from the Bank of England comes just a few hours before the country’s finance chief is due to deliver new budget plans. Rishi Sunak is expected to announce new fiscal stimulus to tackle the impact of virus. However, Karen Ward, chief market strategist at JPMorgan Asset Management, questioned whether rate cuts alone will reduce the impact of the virus. “We believe targeted fiscal measures would prove more effective,” she said via email. Sterling fell on the back of the BOE’s decision, to $1.289 from $1.293.

Bank of England cuts rates in emergency move to counter coronavirus impact, CNBC, Mar 11