The Bank of England, the central bank of the U.K., has made an emergency cut to the main bank rate in light of coronavirus risks.

Announcing the news on Wednesday, the central bank said the rate has been cut by 50 basis points to 0.25%.

“The reduction in Bank Rate will help to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability, of finance,” said the Bank of England.

The central bank has also announced a new term-funding scheme to support small and medium-sized enterprises (SMEs), with additional incentives for banks to support more lending. The new scheme will, "over the next 12 months, offer four-year funding of at least 5% of participants’ stock of real economy lending at interest rates at, or very close to, Bank Rate."

"Although the magnitude of the economic shock from Covid-19 is highly uncertain, activity is likely to weaken materially in the United Kingdom over the coming months. Temporary, but significant, disruptions to supply chains and weaker activity could challenge cash flows and increase demand for short-term credit from households and for working capital from companies. Such issues are likely to be most acute for smaller businesses," said the Bank of England. 

Last week, the U.S. Federal Reserve also cut interest rates by 50 basis points to a target range of 1% to 1.25% to counter coronavirus shock.