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Bloomberg
The Bank of England (BOE) cut interest rates to a record-low 0.1% and added 200 billion pounds to its asset-purchase program in its latest emergency action to mitigate the economic impact of the coronavirus pandemic. The pound rose.
The decision, just days into the tenure of new Governor Andrew Bailey, saw the central bank lower rates by 15 basis points and boost its quantitative easing target to 645 billion pounds. That increase will mainly be made up of extra gilt purchases, but will also include corporate buying, and it will be completed as soon as operationally possible.
The pound extended gains, rising 0.8% to $1.1710. Gilts rallied, with two year yields dropping 17 basis points to 0.18%.The BOE have previously indicated that 0.1% is their effective lower bound for rates. The BOE also announced it was increasing the size of its Term Funding Scheme targeted at smaller businesses. The surprise move followed
an emergency Monetary Policy Committee meeting where policy makers voted to unleash the fresh stimulus.