Newspaper article The Evening Standard (London, England)

Interest Rate Slashed to New Low of 0.25%; First Cut since 2009 Is 'Brexit Bonus' for Families Pound Falls as Bank Resumes 'Money Printing'

Newspaper article The Evening Standard (London, England)

Interest Rate Slashed to New Low of 0.25%; First Cut since 2009 Is 'Brexit Bonus' for Families Pound Falls as Bank Resumes 'Money Printing'

Article excerpt

Byline: Jonathan Prynn and Nicholas Cecil

THE Bank of England today cut interest rates for the first time in more than seven years to stop Britain crashing into recession.

Millions of families were handed a "Brexit bonus" as the Bank halved its benchmark lending rate from 0.5 per cent to a record low of 0.25 as part of a package of emergency measures.

A typical London borrower with a PS300,000 tracker repayment mortgage will save just under PS40 a month, while a home owner on an interest-only deal will be around PS62 better off.

The Bank's rate-setting Monetary Policy Committee, which unanimously backed today's move, also said it "expected" to cut rates even further to as low as 0.1 per cent in the autumn.

Other measures announced today included a resumption of "money printing" Quantitative Easing with the Bank buying up PS60 billion of government gilts and PS10 billion of high-grade company bonds over the coming months. It has also launched a special lending scheme for banks and building societies that find it hard to make a profit during periods of ultra-low interest rates.

The package, which was welcomed by Chancellor Philip Hammond, sent sterling falling sharply. The FTSE 100 jumped and was up around one per cent on the day, or 65 points, 10 minutes after the midday announcement. Mr Hammond backed the Monetary Policy Committee's decision and linked it to the Brexit vote.

He said: "The vote to leave the EU has created a period of uncertainty, which will be followed by a period of adjustment as the shape of our new relationship with the EU becomes clear and the economy responds to that. It's right that monetary policy is used to support the economy through this period of adjustment."

The Chancellor stated that he was prepared to take "any necessary steps to support the economy and promote confidence" in a letter to Bank Governor Mark Carney.

The cut came as part of the dramatic "Super Thursday" slew of announcements against a gloomy backdrop of a rapidly deteriorating economic outlook since last month's EU referendum. The Bank said the Brexit vote had resulted in "a pronounced shift" in the prospects for the UK economy. …

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