THE Bank of England (BoE) yesterday cut interest rates by half a percentage point to 0.25 percent and announced measures to support bank lending ahead of a budget that is set to open the taps on spending to bolster Britain’s economy against the coronavirus outbreak.

Hours later, Iceland’s central bank cut its benchmark interest rate to its lowest level ever at an emergency meeting called to counter the impact of the coronavirus.

“Although the magnitude of the economic shock from Covid-19 is highly uncertain, activity is likely to weaken materially in the United Kingdom over the coming months,” the BoE said.

Iceland’s seven-day term deposit rate was cut by 0.5 percentage points to 2.25 percent, and the deposit institutions’ average reserve requirement was lowered from 1 percent to 0 percent, Sedlabanki said in a statement.

The cuts follow a similar move from the U.S. Federal Reserve last week. It was the first move to take place outside the BoE’s normal schedule since the 2008 financial crisis and Iceland’s central bank was originally scheduled to hold its next rate-setting meeting March 18.

Britain’s bank rate is now back to the record low it reached after 2016’s Brexit referendum.

The Bank of England also told banks yesterday they can tap one of their capital buffers to maintain lending during the coronavirus epidemic.

Last week the U.S. Federal Reserve and the Bank of Canada lowered rates, and the European Central Bank is expected to take action Thursday.(SD-Agencies)