THE Bank of England cut interest rates to a new historic low of 0.25 per cent from 0.5 per cent to boost the economy after the Brexit vote.
The Bank also unveiled a package of measures worth up to £170 billion, including increasing its quantitative easing programme by £60 billion to £435 billion.
The UK is expected to avoid recession, but the Bank warned over "little growth" until the end of the year and delivered its biggest downgrade on record for 2017-2018.
The Bank's Monetary Policy Committee, led by Governor Mark Carney, said they had scope to do more if needed, including taking the key rate close to zero, and also announced a plan to lend as much as 100 billion pounds to banks to ensure the measures reach the real economy.
In addition, the MPC will buy £60 billion of government bonds over six months and as much as £10 billion of corporate bonds in the next 18 months, though there was disagreement among the nine members about whether quantitative easing was warranted at this stage. In total, the balance sheet could expand by £170 billion.
“The package contains a number of mutually reinforcing elements, all of which have scope for further action,” officials said in a statement.
Should their forecast prove correct, “a majority of members expect to support a further cut in bank rate to its effective lower bound” later this year.
The rate reduction marks the first change in the benchmark since March 2009, at the height of the financial crisis.
Officials said they now judge the lower bound to be “close to, but a little above, zero.”
