SINGAPORE (Reuters) – The Bank of England unexpectedly cut interest rates by half a percentage point to 0.25% on Wednesday to bolster Britain’s economy against disruption from a coronavirus outbreak.

The cut was the first move outside the BoE’s normal schedule since the 2008 financial crisis, taking its Bank Rate back to the record low reached after 2016’s Brexit referendum.

Sterling dropped a cent on the news before steadying at around $1.29.

ALLAN MONKS, JP MORGAN

“The only slight surprise is that there is no forward guidance about the next policy move. We think the BoE would still be prepared to cut to 0.1% at its scheduled meeting on 26th March if the situation deteriorates.

“And although not currently our call, the next step for the BoE beyond then is QE if required.”

VICKY CLARKE, INVESTEC:

“Much like the Fed move we saw earlier, it’s a case of making sure that you get out there on the front foot. Like everyone else the Bank is still trying to second guess how far the coronavirus is going to spread through the UK and what the economic consequences are going to be.

“It is better to keep businesses and households operational than see some of them potentially wiped out by what should be short-term disruption. They haven’t done anything on the QE front so there’s still that possibility to pull that level if they need to.”

MICHAEL HEWSON, CHIEF MARKET ECONOMIST, CMC MARKETS:

“This is welcome and is likely to be designed to allow the UK banking sector leeway to extend forbearance for otherwise good businesses as well as mortgage holders undergoing cash flow problems as a result of a slowdown in demand.

“Companies that rely on consumption as well as footfall are already seeing a drop of in demand and this extra cash, it is hoped is designed to be able to help in that.”

KAREN WARD, CHIEF MARKET STRATEGIST FOR EMEA, JP MORGAN ASSET MANAGEMENT:

“We believe targeted fiscal measures would prove more effective. Rent and wage subsidies and tax credits would give companies confidence in their ability to manage down their costs in line with their falling revenues.

“This will prevent a vicious cycle of demand weakness leading to job cuts and further demand weakness. In short, interest rate cuts will help, so long as they are playing the supporting act to pro-active government stimulus.”

DAVID OWEN, CHIEF EUROPEAN FINANCIAL ECONOMIST, JEFFERIES:

“In the BoE’s mind, they can probably cut rates another 0.15 per cent and do another round of QE equivalent to a further 1.5 to 2 per cent of monetary easing.”

ANNA STUPNYTSKA, HEAD OF GLOBAL MACRO, FIDELITY INTERNATIONAL:

“While the action from the BoE and the Treasury on the same day signals the policymakers’ preparedness to respond, the high degree of uncertainty around the extent of the coronavirus spread and its economic impact makes it difficult to gauge whether the new policy measures are going to be sufficient to avert a recession this year.”

MOH SIONG SIM, CURRENCY STRATEGIST, BANK OF SINGAPORE, SINGAPORE:

The move’s timing and scale were surprising, but not altogether unexpected, Sim said.

“Markets had priced in more than 25 basis points, but not the full extent of 50 basis points.

“But it’s not a surprise in the sense that the market was kind of expecting the bank to team up with the U.K. government…it looks like that 50 basis point rate cut could signal that we could expect something quite substantial from the budget itself.”