Bank of England cuts interest rates to 0.1 per cent

The British central bank has cut rates to its lowest level yet

A pedestrian, wearing a protective face mask, walks near the Bank of England in the City of London. Bloomberg

The Bank of England cut its key interest rate to 0.1 per cent to mitigate the economic damage sparked by the coronavirus pandemic.

The British central bank’s Monetary Policy Committee made the unanimous decision on Thursday after cutting its interest rate from 0.75 per cent to 0.25 per cent last week.

“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 temporary,” the BoE said.

“The role of the Bank of England is to help to meet the needs of UK businesses and households in dealing with the associated economic disruption.”

The pound rose from Wednesday's historic low, increasing 0.8 per cent to $1.1710.

The BoE also increased its bond-buying programme, with a £200 billion (Dh861bn ) increase.

Most of the extra debt the BoE will buy will be British government bonds, the BoE said.

Other central banks around the world have stepped up their stimulus efforts.

The US Federal Reserve cut rates to near zero on Sunday, while the European Central Bank launched an 750 billion euro  "pandemic emergency debt-buying programme" on Wednesday.