The Bank of England (BoE) yesterday (19th March) announced a further rate cut from 0.25% to 0.1%, the lowest level in history, in a bid to support the economy amid the Covid-19 pandemic.
Current events have once again forced Mark Carney’s replacement, Andrew Bailey, to undertake emergency actions. Alongside the rate cut, the BoE also announced a further £200bn allocated to the purchase of government and corporate debt. In the Bank’s own words “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 BoE are not alone in their measures – the European Central Bank have announced a £700bn crisis fund and the US Federal Reserve slashed interest rates from 1.25% to 0.50%, and then down to 0% on Sunday.
Meanwhile, at the time of writing, European markets have opened positive on the news of new monetary and fiscal measures and futures predict US markets will do the same. It is of course too early to tell whether this trend is set to continue and we have seen this sort of ‘false dawn’ many times previously.
BAM continue to monitor markets, the global economy and current events closely to ensure we are able to guide our investors through these turbulent times.