Interest rates have been cut from 0.5% to 0.25% by the Bank of England it has been announced today. The bank has also lowered its growth prediction from 2.3% to 0.8% following the Brexit vote.
The cut is the first change since 2009 and it is also the lowest level of interest rates that there has been. In a statement the Bank of England said:
“The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending 3 August 2016, the MPC voted for a package of measures designed to provide additional support to growth and to achieve a sustainable return of inflation to the target. This package comprises: a 25 basis point cut in Bank Rate to 0.25%; a new Term Funding Scheme to reinforce the pass-through of the cut in Bank Rate; the purchase of up to £10 billion of UK corporate bonds; and an expansion of the asset purchase scheme for UK government bonds of £60 billion, taking the total stock of these asset purchases to £435 billion. The last three elements will be financed by the issuance of central bank reserves”.