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Bank Of England Slashes Interest Rate To 0.25%, Notes 'Indicators Have All Fallen Sharply'

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Bank Of England Slashes Interest Rate To 0.25%, Notes 'Indicators Have All Fallen Sharply'

The Bank of England met on Thursday, and, as expected, the central bank lowered its key interest rate for the first time in seven years to 0.25 percent from 0.5 percent.

The vote to lower rates was unanimous across all nine officials, and the majority of officials expect to implement another rate cut at some point this year.

The British economy may have deteriorated faster than expected following the country's decision to quit the European Union in late June.

Related Link: Bank Of England Policymaker: Data Are 'A Lot Worse Than I Had Thought'

The Bank of England also expanded its stimulus measures by expanding its balance sheet by 170 billion pounds (approximately $223 billion) with purchases of gilts and corporate bonds and a lending program for financial institutions.

The central bank will oversee purchases of non-financial investment grade corporate bonds of companies that contribute to the nation's economy.

The central bank's chief, Mark Carney, was quoted by Bloomberg as telling reporters the "economic outlook has changed markedly" since its last meeting. The Canadian born and former Governor of the Bank of Canada also said that "indicators have all fallen sharply, in most cases to levels last seen in the financial crisis, and in some cases to all-time lows."

The British pound fell more than 1 percent in trading to $1.3154, which is a few pennies above its post-Brexit lows of $1.2798. Meanwhile, the British FTSE 100 stock index surged higher by more than 1.50 percent.

The central bank also slashed its growth outlook for next year to 0.8 percent from 2.3 percent, and the economy is now expected to grow just 1.8 percent in 2018, marking a decrease from prior estimates of 2.3 percent.

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