The Bank of England have announced a range of measures to stimulate the UK economy. These include buying £60bn of UK government bonds and £10bn of corporate bonds.
It also announced the biggest cut to its growth forecasts since 1983 from the 2.3% it was expecting to 0.8%.
The decision to cut interest rates to 0.25% was unanimous and is the first change in interest rates since March 2009.
The central bank predicted that inflation would rise above its 2% target as a result of the falling value of the pound. A weaker pound makes imported goods more expensive, which boosts inflation. The pound fell against the dollar by 1% following the announcement.
They warned that there will be very little growth in GDP in the second half of the year, although the forecast for 2016 growth has been left unchanged at 2% due to stronger than expected growth in the first half of the year.