The BoE cut interest rates to a record low of 0.25% today as well as pumping £170bn of new money into the economy as a further stimulus package to prevent the UK falling into recession following the Brexit vote in June.
The Bank’s Monetary Policy Committee unanimously voted 9-0 to reduce rates by 0.25% cutting borrowing rates for the first time in 7 years.
Forecasts for the growth of the UK economy were cut by the biggest single amount since regular forecast have been produced slashing GDP estimates next year from 2.2% to 0.8% and predicting a rise in employment from 5% to 5.4%.
The £170bn QE scheme will consist of a further £60bn of government debt, taking the total size to £435bn & the purchase of £10bn of corporate bonds; the other £100bn will take the form of a system it called ‘Term Funding Scheme’ which will provide cheap funding to banks in an effort to ensure the rate cuts would be passed onto customers without banks facing their own funding costs.
The FTSE100 immediately soared on the back of this announcement, jumping almost 1.5% taking it out of negative territory while Sterling fell as expected against all other major currencies.