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Emergency reduction in interest rates to historic low

Policy makers at the Bank of England have voted unanimously to reduce interest rates from 0.75% to an historic low of 0.25% to strengthen the economy as it deals with the impact of the coronavirus outbreak.

The move comes ahead of the chancellor’s Budget which is also expected to focus on efforts to brace the economy in Northern Ireland and the rest of the UK for an “economic shock that could prove large and sharp, but should be temporary” as described by Mark Carney when announcing the interest rate cut. The Governor of the Bank of England said the interest rate cut was part of coordinated action which is hoped to have “maximum impact”.

Interest rate cuts are usually good news for mortgage borrowers and first time buyers, but this reduction is set against a prediction of a ‘materially weakened’ economy in the coming months with potential disruption that could impact the ability of businesses and individuals to meet their financial obligations.

Most mortgage borrowers will have to wait to see how their mortgage lenders respond to the interest rate cut before it will be clear how much their monthly mortgage payment will be reduced by, if at all.

The Bank of England also announced that billions of pounds of additional lending will be made available to help support businesses deal with the financial impact of the Coronavirus outbreak.

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