15
Aug
Bank of England enters “QE” and Cuts Interest Rates to Historic Lows
LONDON — The Bank of England said on Thursday that it would cut its main interest rate to its lowest point ever and expand other measures to bolster Britain’s economy over concern that the country’s decision to leave the European Union could weigh on growth.
The move comes at a time of widespread uncertainty about the longer-term impact of the vote to leave the bloc, known as Brexit. It is unclear what Britain’s future trading relationship will be with the European Union, and crucially, how much access London’s prized financial services industry will have to the Continent. The referendum also unleashed a summer of political turmoil that led to a new government and to questions about the new leadership’s economic policies.
The central bank’s Monetary Policy Committee voted unanimously to lower its benchmark interest rate to 0.25 percent, the lowest level in the bank’s 322 years. The rate had been at 0.5 percent since March 2009.
The bank said on Thursday that it would buy an additional 60 billion pounds, or about $80 billion, in assets under the program, increasing the total to £435 billion. The Bank of England also said that it would buy up to £10 billion in investment grade corporate bonds from nonfinancial companies. It stipulated that the bonds must be traded in pounds and that the companies must be “making a material contribution” to the British economy. The new private-sector bond buying program is expected to begin next month.
From NYT article Aug, 2016