The Bank of England has cut the base rate of interest to 0.1%.
The drop from 0.25% is a further emergency move to shore up an economy shaken by the coronavirus pandemic.
The Bank of England's Monetary Policy Committee (MPC) voted unanimously in favour of the rate cut.
The central bank will also increase its holdings of UK government bonds and sterling non-financial investment-grade corporate bonds by £200 billion.
In a statement, the central bank said: "Over recent days, and in common with a number of other advanced economy bond markets, conditions in the UK gilt market have deteriorated as investors have sought shorter-dated instruments that are closer substitutes for highly liquid central bank reserves.
"At its special meeting on 19 March, the MPC judged that a further package of measures was warranted to meet its statutory objectives.
"It therefore voted unanimously to increase the Bank of England's holdings of UK government bonds and sterling non-financial investment-grade corporate bonds by £200 billion to a total of £645 billion, financed by the issuance of central bank reserves, and to reduce Bank Rate by 15 basis points to 0.1%."
The Bank of England said that financial conditions in the UK and globally have “tightened” in recent days due to weaker market conditions.
The emergency meeting came less than a week before the MPC’s next scheduled meeting on Wednesday March 25.
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