Bank of England Cuts Interest Rates to Record Low, Boosts QE Program To Address 'Sharp and Large' Economic Shock

The Bank of England's surprise rate move is the latest in a series of non-coordinated central bank actions over the past week, adding to Fed rate cuts and ECB bond buying programs.

The Bank of England cut its main interest for a second time this month on Thursday, taking it to 0.1% and the lowest levels in its 300 year history while warning of a "sharp and large" economic decline as a result of the coronavirus outbreak.

The BoE's Bank Rate was cut by 15 basis points to 0.1% following and extraordinary meeting of its Monetary Policy Committee in London. The BoE also said it would boost its largely-dormant quantitative easing program by £200 billion ($234 billion) and increase the size of a scheme designed to entice banks to lend into the real economy.

"The spread of Covid-19 and the measures being taken to contain the virus will result in an economic shock that could be sharp and large, but should be temporary." the Bank said. "The role of the Bank of England is to help to meet the needs of UK businesses and households in dealing with the associated economic disruption."

"Over recent days, and in common with a number of other advanced economy bond markets, conditions in the UK gilt market have deteriorated as investors have sought shorter-dated instruments that are closer substitutes for highly liquid central bank reserves," the statement added.

The pound, which had hovered nearly 1985 lows of 1.1525 against the U.S. dollar in early Thursday trading, jumped to 1.1749 following the BoE decision, while the FTSE 100 reversed earlier declines to rise 1.4% on the session at 5,100 points.

The BoE's unscheduled move follows a series of non-coordinated central bank actions over the past week, including the European Central Bank's decision to launch a new $820 billion bond buying program and the Federal Reserve's surprise 100 basis point rate cut on Sunday.