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U.K. Cuts Interest Rates for First Time in 7 Years
The Bank of England lowered its base lending rate to a record low 0.25% from 0.5%. It’s the first rate cut since March 2009.
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The Bank of England lowered its base lending rate to a record low 0.25% from 0.5%. It’s the first rate cut since March 2009.
The cut comes as the central bank predicts near-zero growth in the British economy in the second half of 2016, thanks to uncertainty over the impact of the U.K. vote in June to exit the European Union.
The BoE sharply reduced its 2017 growth projection for the British economy to 0.8% from the 2.3% it forecast in May. It also trimmed its growth forecast for 2018 to 1.8% from 2.3%.
The bank announced additional steps to fortify the British economy. It unveiled a £100 billion ($131 billion) initiative and penalty system that forces banks to pass on the lower interest rates in loans to businesses and individuals.
The BoE also says it will expand its quantitative easing program to £425 billion ($558 billion) with plans for an additional purchase of £60 billion ($79 billion) in government bonds and £10 billion ($13 billion) in corporate bonds.
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