So that's it – after seven long years of interest rates becoming increasingly boring, today the Bank of England's monetary policy committee (MPC) voted to cut the base rate to 0.25 per cent.
Here's how analysts have reacted:
1. "Oh, the irony"
Calum Bennie, savings expert at Scottish Friendly:
“It seems for many savers chickens have come home to roost. Any false sense of security around the outlook for savers post-Brexit has now been removed. It’s particularly ironic that this move is most likely to affect the cash savings of the over 60s, the demographic that were among the most in favour of leaving the EU."
2. "This signals the Bank is ready"
Dean Turner, economist at UBS Wealth Management
“Though not as sizeable as some expected, today’s cut represents the prudent stewardship we have come to expect of Mark Carney’s Bank of England. As anticipated, sterling’s post-Brexit slide has pushed up the inflation profile and the inflation target will now be breached. But it’s the much weaker outlook for growth, with the prominent possibility of a recession that will have spurred the Bank into taking action today.
“If the economy continues to deteriorate, the Bank have signalled they are ready to lower rates further and provide additional QE, though rates are unlikely to stray into negative territory with Carney at the helm. The UK’s financial services-dominated economy isn’t best placed to weather negative rates."
3. "The Bank is using monetary policy to combat Brexit"
Naeem Aslam, chief market analyst, Think Markets UK:
"The bank clearly wants to use the monetary policy to combat the Brexit woes and it is committed to do whatever it takes. But, most traders are wary of the fact that quantitative easing has reached its limit and the bank may not be able to achieve its goal by using this.
"When we look at sterling it has dropped off the cliff as short positions were substantially high before the decision and today’s verdict has just fuel the fire. As for the equity market, we are experiencing some new bullish bets which have pushed the market off from its low as expected – thanks to cheap money .
4. "Further pain for pension schemes"
Tom Selby, senior analyst, AJ Bell:
“The fallout from the BHS disaster has thrust the UK’s defined benefit pensions crisis back into the spotlight, and today’s rate cut piles further pain onto scheme sponsors. A lower base rate will place further downward pressure on gilt yields, which have already plummeted in the wake of the Brexit vote.
“Gilt yields are used by actuaries to value DB liabilities, so a further drop in yields will push up already sky-high scheme deficits.
“On the flip side, if today’s monetary stimulus does the trick and boosts the UK economy, then the value of the assets DB schemes hold to pay out pensions may well rise.”
5. "Mitigating risk of a downturn"
Nick Dixon, investment manager, Aegon:
“Today’s rate cut should mitigate risk of a downturn after a slew of disappointing post-Brexit economic data. Low rates started as an exceptional measure to stabilise the economy and now seem to be the new normal. The big question is will a 0.25 per cent rate last long.
"Looser monetary policy, coupled with declining pound and a structurally high trade deficit, will lead to higher inflation. This may need to be checked by interest rate increases within six to nine months, which are likely to rise faster and higher than current market expectations.”
6. "It's the sensible thing"
Chris Beauchamp, senior market analyst, IG:
"The members of the MPC have done the sensible thing – wait for initial data, and then move fast and hard to get ahead of the curve.
"The big news is the decision to begin corporate bond purchases, following the lead of the Bank of Japan and the ECB, plus the sharp downgrade to growth forecasts for 2017, which have been slashed markedly. The voting was firmly dovish, indicating that more could be on the way later in the year, depending on how the data pans out."
7. "Throwing caution to the wind"
Samuel Tombs, chief UK economist, Pantheon Macroeconomics
"The MPC has thrown caution to the wind and has sanctioned further stimulus, even though it believes its actions will push inflation above its target. Following its policy actions, the committee’s central projection for CPI inflation in two years’ time is further above the two per cent target than in May and is the highest for a decade.
"The committee also signalled that more easing could be on its way soon…The MPC currently judges the lower bound to be '…close to, but a little above, zero'. The committee, however, has regularly underestimated the impact of past exchange rate movements on inflation. By our reckoning, CPI inflation could pick up to three per cent late next year, conformably above the committee’s expectations, potentially calling time on further stimulus."