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March 11, 2020BANK OF ENGLAND MONETARY POLICY The Bank of England held a special meeting on March 10, 2020 in which the Monetary Policy Committee (MPC) voted unanimously to reduce the bank rate by 50 basis points to 0.25 per cent. The Bank will also increase central bank reserves to finance a new term funding scheme with incentives for lending to small and medium sized enterprises. To further enhance the supply of credit during the Covid-19 outbreak, the Bank's Financial Policy Committee also reduced the capital buffer rate to 0 per cent, adding up to £190 billion in additional commercial bank lending to businesses.
These efforts are intended to support business and consumer confidence during the anticipated temporary shock from the Covid-19 outbreak. Citing the results of stress tests, the Bank estimates that any economic disruption from the outbreak is manageable for the UK financial system.
The MPC also voted to maintain the stock of UK non-financial corporate bonds stock at £10 billion and the stock of UK government bond purchases at £435 billion.
Bank of England: Measures to Respond to the Economic Shock From Covid-19
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