The Bank of England has cut interest rates as an emergency decision to stabilize the economy amid coronavirus outbreak.
International news agency states that it is the second cut authorities made in just one week.
Interest rates have been decreased to 0.1% from 0.25%. These interest rates are now its lowest ever in the 325 years of the Bank’s history.
According to the international news agency BBC, The Bank said it would also increase its holdings of UK government and corporate bonds by £200bn with an effort to lower the cost of borrowing.
It is a dramatic decision Andrew Bailey has taken, who took over from Mark Carney as Bank of England governor on Monday.
Last week, the Bank announced a 0.5% cut in rates to 0.25% and a package of measures to help businesses and individuals cope with the economic damage caused by the virus.
But the Bank said that the measures taken to tackle the pandemic were not going to be enough. It believed “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 fresh rate cut takes interest rates to the lowest they can feasibly go, said Jeremy Thomson-Cook, chief economist at payments company Equals Group.
“Lower rates and additional quantitative easing can keep markets satisfied and borrowing costs for both businesses and the government down but unless money is forced into the hands of small businesses soon, then it will be for nothing; they are the ones laying off staff due to a liquidity shock,”