Bank moves to control inflation

Pensions Insight

The Bank of England has cut the UK interest rate to a record low of 0.25% from the current level of 0.5%.

Low interest rates are a problem for insurers because they reduce the investment returns they can make.

The Bank announced the cuts alongside a series of quantitative easing measures, which include buying back up to £10bn of UK corporate bonds and a £60bn expansion of the asset purchase scheme for UK government bonds.

The interest rate has been at 0.5% since 2009.

The Bank has made the moves to counteract an increase in inflation, which it expects as a result of the weakening pound following triggered by the UK’s decision to leave the European Union.