The Bank of England unexpectedly cut its key interest rate and launched a new funding scheme for small businesses as it expects the UK economy to take a major hit due to the coronavirus, or Covid-19, outbreak. The Monetary Policy Committee unanimously voted to cut the bank rate by 50 basis points to a record low 0.25 percent, following a special meeting on March 10, the central bank said in a statement on Wednesday. The MPC also voted unanimously to introduce a new Term Funding scheme with additional incentives for Small and Medium-sized Enterprises, or TFSME, financed by the issuance of central bank reserves.
"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 of England said.
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