Bank Base Rate cut to 0.1%

Bank Base Rate cut to 0.1%

15:42 PM, 19th March 2020, About 4 years ago 9

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The Bank of England’s Monetary Policy Committee (MPC) convened a special meeting and voted to cut Bank rate to a record low 0.1% and increase holdings of UK government and corporate bonds by £200 billion.

“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 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.

On 11 March, the Bank of England’s three policy committees announced a package of measures to support UK businesses and households through this period.  In his Budget on the same day, the Chancellor of the Exchequer announced a number of fiscal measures with the same aim.  On 17 March, this combined package of measures was complemented by the announcement by HM Treasury of the Covid 19 Corporate Financing Facility (CCFF), for which the Bank will act as HM Treasury’s agent.  By purchasing commercial paper, the CCFF will provide funding to non-financial businesses making a material contribution to the UK economy to support them in paying salaries, rents and suppliers while experiencing the likely disruption to cashflows associated with Covid-19.

In light of actions to tackle the spread of the virus, and evidence relating to the global and domestic economy and financial markets, the Monetary Policy Committee (MPC) held an additional special meeting on 19 March.  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.  As a consequence, UK and global financial conditions have tightened.

At its special meeting on 19 March, the MPC judged that a further package of measures was warranted to meet its statutory objectives.  It therefore voted unanimously to increase the Bank of England’s holdings of UK government bonds and sterling non-financial investment-grade corporate bonds by £200 billion to a total of £645 billion, financed by the issuance of central bank reserves, and to reduce Bank Rate by 15 basis points to 0.1%.  The Committee also voted unanimously that the Bank of England should enlarge the TFSME scheme, financed by the issuance of central bank reserves.

The majority of additional asset purchases will comprise UK government bonds.  The purchases announced today will be completed as soon as is operationally possible, consistent with improved market functioning.  The Bank will issue further guidance to the market in due course.”

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Andy Bell

15:42 PM, 19th March 2020, About 4 years ago

If all the lenders pass this through to SVR's it will be a good help to LL's trying to workout how they can finance the help to tenants.
No good for Fixed Rates though. Hopefully some new deals with low fees will come through with relaxations on rental cover.

Lee Bailey

17:15 PM, 19th March 2020, About 4 years ago

Reply to the comment left by Andy Bell at 19/03/2020 - 15:42
All my products are on SVR... Bank of Ireland are not passing the cuts on for SVR customers. So despite the government trying to assist in this crisis, these lenders don't care.


17:18 PM, 19th March 2020, About 4 years ago

Don't hold your breath Andy.


17:21 PM, 19th March 2020, About 4 years ago

My children are in the process of buying a house and had a mortgage arranged. I enquired if they could get a better deal after the 0.5% rate cut but rates have gone up.

Andy Bell

20:18 PM, 19th March 2020, About 4 years ago

Reply to the comment left by JB at 19/03/2020 - 17:18
Maybe it's something the Government should force them to do especially if they are getting QE cash.
I'm mostly on BOE trackers, so should benefit, or I should say my struggling tenants will benefit.
If it doesn't get passed on to SVR's it'll be time to kick up a fuss.

Paul Simmons

11:41 AM, 20th March 2020, About 4 years ago

I spoke to Bank of Ireland and they are passing on the rate cut. Either from 1st april or maybe slightly later.

This is for morgages that are around 10 years ago. I am not sure if different for some people.

They are personal BTL morgages

Lee Bailey

13:40 PM, 21st March 2020, About 4 years ago

Reply to the comment left by Paul Simmons at 20/03/2020 - 11:41
Thanks Paul, yes you are very correct. I was misinformed.

Paul Simmons

14:01 PM, 21st March 2020, About 4 years ago

Reply to the comment left by Lee Bailey at 21/03/2020 - 13:40

Lee Bailey

14:18 PM, 21st March 2020, About 4 years ago

Reply to the comment left by Lee Bailey at 19/03/2020 - 17:15
Apologies Everyone... I was misinformed.

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