Interest rates at 0.1% for the first time in history
Interest rates at 0.1% for the first time in history by Liam Sheasby for Bullion by Post
The Bank of England today shocked investors and the public alike with news that the UK interest rate would drop to an all-time low of just 0.1% – an unmatched figure since the BoE first started in 1694.
The announcement also revealed that the Bank would restore quantitative easing, promising to buy £200 billion of UK financial assets.
The Bank’s new governor, Andrew Bailey, spoke to the press today saying: “The obvious increase in the pace and severity of Covid-19, which has built during the week, was something we had to assess and respond to, we can’t wait for the hard economic data before we act”.
Gold’s price shot up yesterday to from £1,240 per ounce to £1,297.77 as the Pound fell to a 35-year low against the US Dollar, with the Bank of England bracing itself for crisis. In the face of the Covid-19 coronavirus, investors chose to opt into gold and other precious metals, as well as Chinese bonds and the US Dollar to protect themselves for the coming weeks and months.
Today’s response saw a 2.8% rise in the Pound’s value against the Euro to €1.0933, and a 1.3% rise against the US Dollar to $1.1772. Despite the gains, Sterling remains at very historically low levels against these competing currencies, and the Bank of England will be desperate to do all it can to avoid parity or worse.
Global markets have all benefited slightly from similar interest rate cuts and other methods of stimulus, but the past three weeks have been a huge hit to the major markets, with the Dow Jones’ current trajectory – below – worse than that of the 1929 Wall Street Crash.