The Bank of England just announced an interest rate cut. This is the first rate cut in seven years. Mark Carney, the Bank governor, announced the reduction from 0.5% to 0.25% at noon on Thursday.
There has been increasing pressure on the Bank to act after recent poor economic data and while the decision was not certain, most economists agreed that the sharp fall in the services sector, factory activity down and the slowing construction industry made this a perfect time for the reduction.
UK growth forecasts were also slashed.
According to Samuel Tombs, chief UK economist at Pantheon Macroeconomics, "Economic data since the referendum have weakened sharply. There is a real need for more stimuli now."
David Blanchflower, a former MPC member and now professor of economics at Dartmouth College in the US, assured investors that if the current economic data turns around, the central bank could always reverse the cut.
The pound dropped immediately on the news and the FTSE 100 jumped 1 percent while UK 10-year government bond yields dropped to a new record low.
As part of the package, the UK central bank will also cut borrowing costs, boost its QE scheme, and introduce a new £100bn funding for its lending scheme.