The Bank of England has announced an unexpected cut to interest rates, citing the “economic shock” of the spreading coronavirus.
After a meeting on Tuesday, the central bank announced today that its Monetary Policy Committee had voted unanimously to cut the bank rate by 50 basis points to 0.25%.
“The reduction in bank rate will help to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability, of finance,” the bank said.
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The central bank said the economic impact of coronavirus “could prove sharp and large, but should be temporary”.
It added: “Following the spread of Covid-19, risky asset and commodity prices have fallen sharply, and government bond yields reached all-time lows, consistent with a marked deterioration in risk appetite and in the outlooks for global and UK growth. Indicators of financial market uncertainty have reached extreme levels.”
Equity investors responded positively, with the FTSE up by about 1.5% shorty after opening.
Kier Group, intu Properties and Balfour Beatty were among the highest risers in the FTSE All-Share early trading, with Persimmon and Taylor Wimpey among the top gainers in the FTSE 100.
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