The bank also said it would purchase up to roughly $102.5 billion of government bonds and about $17.1 billion of corporate bonds.
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Europe’s stock markets advanced Friday, one day after the Bank of England announced a post-Brexit interest rate cut and surprise stimulus, while investors awaited key United States non-farm payrolls data.
USA stocks are mostly higher Thursday as the market continues the small moves it’s made in the last few weeks.
Thursday’s decision underscored the bank’s concern about an economy that has taken a sharp turn lower since the vote to leave the European Union, which creates uncertainties for businesses about the country’s future trade relations with the rest of the bloc.
All but two of 52 economists in a Bloomberg survey predicted a cut in rates that would be the first since March 2009.
British interest rates are now at their lowest level in the Bank of England’s (BoE) 322-year history.
The British pound GBP=D4 crawled up 0.2 percent to $1.3130 GBP=D4 after retreating 1.7 percent overnight.
The bank’s Monetary Policy Committee (MPC) expects Britain’s economy to stagnate for the rest of this year and suffer weak growth next year while inflation rises. The Nasdaq has made small gains this week while the Dow and S&P 500 are slightly lower. “Alongside the actions the Bank is taking, I am prepared to take any necessary steps to support the economy and promote confidence”, Hammond said in a letter to the central bank.
Barclays, meanwhile, said that the low interest rates would be passed onto consumers, promising a mortgage rate cut of 0.25 percent. The cut in Bank Rate and the measure meant to ensure banks passed it on to consumers – known as the Term Funding Scheme (TFS) – gained unanimous support. The MPC said the costs of trying to bring it back to its 2 percent target in the immediate future would exceed the benefit.
Shanghai ended up 0.1 per cent as investors await the release of economic data next week, including on trade, investment and retail sales.
Aug 5 Sterling sank towards $1.30 on Friday, its weakest in three weeks, after stronger-than-expected jobs numbers in the United States strengthened speculation US interest rates would rise this year.
BONDS AND CURRENCIES: Bond prices rose and the yield on the 10-year Treasury note fell to 1.50 percent from 1.54 percent.
USA crude was down 0.2 percent at $41.83 a barrel after surging almost 3 percent overnight.
Facebook rose 1.85 dollars (£1.41), or 1.5%, to 124.36 dollars (£94.89), and Broadcom gained 2.88 dollars (£2.19), or 1.8%, to 166.99 dollars (£127.42).
The TFS – which makes up to 100 billion pounds of newly created central bank funds available at around the BoE’s new Bank Rate of 0.25 percent – would need to be retooled if the central bank cut rates closer to zero, he added.
The dollar gained 0.1 percent to 101.27 yen JPY= , on track to fall 0.8 percent on the week.
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The dollar index, which tracks the greenback against six major currencies, drew strength from the gains against sterling and was up 0.22% at 95.773.
