>> The Bank of England has cut rates to a record low, borrowing costs down to just a quarter of 1% from half a percent, that's after seven years on hold. Reuters chief markets correspondent, Jamie McGeever, says Brexit is to blame.>> The bank has taken this action to counter the negative effects and the negative impact on the economy from Brexit.
The vote to the EU Referendum was June 23rd, since then we've had business confidence surveys, consumer confidence surveys that shows shortfalls. In some cases, the biggest fall was in confidence in decades, since that vote to leave the EU and many economists expect it only to be a matter of time before that translates into real economic activity.
>> The bank thinks the UK will narrowly avoid recession, but has slashed its growth forecast for next year. That's one reason why it's also restarting quantitative easing creating new money to buy 60 billion pounds of government debt. For the first time it will also buy corporate bonds up to 10 billion pounds worth, another 100 billion set aside for a new program to help banks lend.
>> The bank of England Mark Carney and Cole behind me here. I'm hoping that money will transmit through the economy. Banks will lend it consumers and businesses will borrow and spend and reactivate the economy.>> The scale and type of QE are surprised for markets. The benchmark FTSE share index up over 1% in the moments after the news.
Now that Carney has made his move, the focus turns to fiscal policy. Prime Minister Teresa May under pressure to show the government will also take action to support the economy.