Following the spread of Covid-19 in March 2020, risky asset and

commodity prices have fallen sharply, and government bond yields

reached all-time lows, consistent with a market deterioration in risk

appetite and in the outlooks for global and UK growth.

Indicators of financial market uncertainty have reached extreme levels. Meanwhile, the

UK inflation was 1.5% that is still well below the target 2%. In response to

this economic condition, at its special meeting ending on 10 March 2020,

the Monetary Policy Committee (MPC) of the Bank of England voted

unanimously to reduce Bank Rate by 50 basis points to 0.25%.

Critically discuss the central bank's goals and functions in regard to the current

case of the Bank of England's rate cut.