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U.K. Cuts Interest Rates in Response to Coronavirus

Policymakers reduced rates down to the lowest level in history to help cushion the impact of COVID-19.

The Bank of England cut its main interest rate by half a percentage point to 0.25% on Wednesday, its lowest level on record, as part of the government’s response to the economic fallout of the coronavirus.

“Although the magnitude of the economic shock from Covid-19 is highly uncertain, activity is likely to weaken materially in the United Kingdom over the coming months,” the bank said in a statement.

Meanwhile, U.K. Finance Minister Rishi Sunak announced £30 billion ($39 billion) in tax breaks and £12 billion ($15.5 billion) of coronavirus relief measures, pledging to do “whatever it takes” to protect the economy.

“Policymakers are clearly concerned about the risks ahead,” Kallum Pickering, a senior economist at Berenberg Bank, said. “The joint action reflects the intention to send a big message that policymakers are prepared to take aggressive and preemptive steps to support the economy.”

The European Central Bank, which met Thursday in Frankfurt, announced…

William Sprouse

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