The Bank of England has slashed interest rates to a record low and launched other emergency measures as part of a dramatic and coordinated UK response to limit the economic fallout from the coronavirus.
The central bank said in a statement Wednesday that while the magnitude of the shock from the coronavirus remains “highly uncertain,” economic activity is “likely to weaken materially in the United Kingdom over the coming months.”
A few hours later, UK finance minister Rishi Sunak pledged to do “whatever it takes” to protect the economy. He announced £30 billion ($39 billion) in tax breaks and additional spending, including targeted coronavirus relief measures worth an estimated £12 billion ($15.5 billion).
The rate cut follows the Federal Reserve’s decision to slash US interest rates by half a percentage point in an extraordinary move last week. The European Central Bank, which meets Thursday in Frankfurt, is expected to push interest rates deeper into negative territory and announce other measures to fight economic damage from the virus.