Australia markets closed

Bank of England cuts rates to 0.1 per cent

William Schomberg and David Milliken
The Bank of England has slashed interest rates to just 0.10 per cent in another emergency move

The Bank of England has cut interest rates to 0.10 per cent - its second emergency rate cut in just over a week - and ramped up its bond-buying program in a fresh attempt to shield Britain's economy from the coronavirus outbreak.

The BoE's Monetary Policy Committee voted unanimously for the cut to the benchmark rate - which had been slashed to 0.25 per cent on March 11 - and for a 200 billion-pound ($A405 billion) increase in the central bank's bond-buying program to 645 billion pounds.

"Over recent days, and in common with a number of other advanced economy bond markets, conditions in the UK gilt market have deteriorated as investors have sought shorter-dated instruments that are closer substitutes for highly liquid central bank reserves," the Bank said.

"As a consequence, UK and global financial conditions have tightened."

Most of the extra debt the BoE will buy will be British government bonds, the BoE said as it followed other central banks around the world in ramping up their stimulus efforts.

The pound, which on Wednesday sank to a 35-year-low as investors rushed into US dollar assets, rallied half a per cent to the day's highs after the BoE's announcement.

Yields on British government bonds fell sharply, reversing some of a steep rise that began on Wednesday.

The purchases announced on Thursday would be completed as soon as "operationally possible, consistent with improved market functioning," the BoE said.

"The Bank will issue further guidance to the market in due course," it said.