In its first emergency meeting since the 2008 financial crisis, the monetary policy committee voted unanimously on Tuesday to slash the base rate from 0.75% to 0.25%.
The cut was announced on Wednesday, in tandem with Chancellor Rishi Sunak's budget, which included billions of pounds of measures to support the economy during an extended outbreak of the virus.
This includes the new Coronavirus Business Interruption Loan Scheme, which provides lenders with a guarantee of 80% on each loan, extending statutory sick pay, business rates relief, and small business grant funding.
"The only slight surprise is that there is no forward guidance about the next policy move", said Allan Monks, an economist at JPMorgan in London, who predicted the rate cut and measures to support bank lending.
"Today's summit demonstrates that the government's response is clearly and closely coordinated with the Bank of England, and that we are working with the banking sector to do everything it takes to support businesses through this hard time", Sunak said in a statement.
BRITAIN launched a £30 billion (S$54 billion) economic stimulus plan just hours after the Bank of England (BOE) slashed interest rates, and announced support for bank lending aimed at warding off the risk of a novel coronavirus recession.
"Although the magnitude of the shock from Covid-19 was highly uncertain, the MPC judged it likely that activity would weaken materially over the coming months", the minutes say.
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It's the first time interest rates have been moved by 50 basis points since 2009 and take rates back down to a record low. In that context, a rate cut may not do a large amount to offset the cashflow damage.
The numbers not only preceded the government's first budget, but also key stats from the United Kingdom that supported the move.
The committee signalled that it could go further if the economic shock caused by coronavirus deepens.
The promise was preceded by the BOE's statement last week that the Bank is closely cooperating with HM Treasury and the Financial Conduct Authority (FCA) - as well as its worldwide partners - "to ensure all necessary steps are taken to protect financial and monetary stability" amid the ongoing coronavirus outbreak.
The Prudential Regulation Authority (PRA) has set out its supervisory expectation that banks should not increase dividends or other distributions, such as bonuses, in response to these policy actions.