The Bank of England announced today that interest rates will fall at the steepest rate since the financial crisis as it sought to combat the economic impact from the coronavirus outbreak.

Bank of England

Bank of England

Source: Shutterstock/r.nagy

Rates were cut from 0.75% to 0.25%.

During a press conference, outgoing Bank of England governor Mark Carney said the rate cut would allow banks to shore-up businesses hit by the fallout from the disease, which is sweeping the world after emerging in China late last year.

“It’s [a] different form of shock than 2008,” Carney said. “There is no reason for this shock to turn into the experience of 2008, a virtual lost decade in a number of economies, if we handle this well.”

Restrictions on travel and the cancellation of events, such as the annual property event Mipim, have hit hotels, airlines, and the economy at large.

Property stocks tumbled last week after investors were spooked by the unknown impact of the coronavirus outbreak, with retail stocks hit particularly hard. 

The rate cut will allow banks to lend money to affected businesses more cheaply. Other measures by the bank included a £100bn scheme to help banks and building societies continue lending to small and medium-sized businesses. Banks were also warned not to increase dividends or bonuses as a result of the new money.