Bank of England cuts interest rate to lowest ever level

The Bank of England has cut interest rates for the second time this month to the joint-lowest ever level of 0.1%.

The Bank made the decision at an emergency meeting of its rate-setting committee yesterday (19 March) as well as making the decision to increase its quantitative easing stimulus package to £200bn.

The Bank and Prudential Regulation Authority (‘PRA’) have also revealed the cancellation of the Bank’s 2020 annual stress test. It said the decision to cancel the 2020 stress test for the eight major UK banks and building societies is intended to help “lenders focus on meeting the needs of UK households and businesses via the continuing provision of credit”.

The Bank and PRA also added it noted the very high levels of uncertainty around how Covid-19 will impact the economy.

It said: “The Bank continues to consider the potential interaction of Covid-19 with IFRS9, including through discussion with relevant bodies domestically and internationally, and expects to provide further guidance to firms regarding our approach next week, with a view to assisting firms to adopt consistent approaches in the face of the prevailing uncertainty.”

The news comes as The Bank of England announced that The Covid Commercial Financing Facility (CCFF) will provide funding to businesses by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy.

It said the facility will help businesses across a range of sectors to pay wages and suppliers, even while experiencing severe disruption to cashflows.