Coronavirus fears push Bank of England to slash interest rate to record low

The Bank of England slashed its key interest rate by half a percentage point to 0.25% on Wednesday, as part of an emergency package of measures to cushion the “economic shock” of the coronavirus outbreak.

The central bank said the move would “help support businesses and consumer confidence at a difficult time.”

The cut took the main rate to a record low, last reached after Britain’s June 2016 vote to leave the European Union. It came just hours before the British government was expected to announce its own package of measures to shore up the economy against arguably the biggest economic shock since the global financial crisis 12 years ago.

The cut follows similar reductions from the U.S. Federal Reserve and the Bank of Canada. The European Central Bank is also expected to announce a package of stimulus measures on Thursday.

In contrast to Italy, the epicenter of Europe’s outbreak with 10,100 cases, Britain has only 373 confirmed cases of COVID-19 and six deaths. But the outbreak has already affected the U.K. economy, hitting tourism and clogging up the global supply chains that many modern businesses rely on.

The Bank of England said the British economy, already weighed down by uncertainty about the U.K.’s future relationship with the European Union, would likely “weaken materially” in coming months due to the virus outbreak.

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