The Bank of England has today cut its key interest rate from 0.75% to 0.25% in the face of the coronavirus epidemic, announcing the move on the morning of the UK finance minister's budget speech. The monetary policy committee was unanimous in its decision at a special session on Tuesday.

The UK central bank has also relaxed conditions for banks so that they can more easily lend to companies, meaning banks could lend an additional £190 billion. Outgoing governor Mark Carney says the action is designed to have maximum impact.

The move provokes the reaction in some longstanding market observers that the move, and the circumstances in which it was made, suggest the Bank has surrendered what little was left of its supposed independence from government.

Elsewhere, European Central Bank president Christine Lagarde has warned EU leaders in a telephone conference that coronavirus will cause economic contraction in Europe similar to that experienced in the global financial crisis that began in 2008 unless EU member state governments make financial support available.

The ECB is expected to cut its key interest rate at its meeting on March 12 and commit to engaging in monetary stimulus by providing ultra cheap funding for banks to increase lending. Lagarde warns that this will only work if EU governments play their part by increasing their own spending.

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The Bank of England has today cut its key interest rate from 0.75% to 0.25% in the face of the coronavirus epidemic, announcing the move on the morning of the UK finance minister's budget speech. The monetary policy committee was unanimous in its decision at a special session on Tuesday.

The UK central bank has also relaxed conditions for banks so that they can more easily lend to companies, meaning banks could lend an additional £190 billion. Outgoing governor Mark Carney says the action is designed to have maximum impact.

The move provokes the reaction in some longstanding market observers that the move, and the circumstances in which it was made, suggest the Bank has surrendered what little was left of its supposed independence from government.

Elsewhere, European Central Bank president Christine Lagarde has warned EU leaders in a telephone conference that coronavirus will cause economic contraction in Europe similar to that experienced in the global financial crisis that began in 2008 unless EU member state governments make financial support available.

The ECB is expected to cut its key interest rate at its meeting on March 12 and commit to engaging in monetary stimulus by providing ultra cheap funding for banks to increase lending. Lagarde warns that this will only work if EU governments play their part by increasing their own spending.