It also voted to continue with the existing £200bn QE programme.
The Bank of England has held the base rate at 0.1%, after the bank’s Monetary Policy Committee voted unanimously to leave it unchanged.
It also voted to continue with the existing £200bn QE programme.
According to BoE: “The spread of the disease and the measures that are likely to be needed to contain it have evolved significantly.
“The economic consequences of these developments are becoming more apparent and a very sharp reduction in activity is likely.
“Given the severity of that disruption, there is a risk of longer-term damage to the economy, especially if there are business failures on a large scale or significant increases in unemployment.”
Furthermore, the operational target for monetary policy remains an inflation rate of 2%.
Despite this, CPI inflation was recorded at 1.7% in February 2020.
The bank outlined that prior to recent developments involving coronavirus, inflation was set to fall below the MPC’s 2% target.
It added, “It is now likely to decline to below 1% in the spring, reflecting the pass-through to fuel prices of the recent and sharp decline in the oil price.”
