Members of the BoE's Monetary Policy Committee voted to cut Bank Rate for the first time since August 2016, to 0.25% from 0.75%, the central bank said in a statement.
"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," the BoE said.
The BoE maintained its target for government bond purchases to 435 billion pounds and its corporate bond purchase target to 10 billion pounds.
The BoE also introduced a new term funding scheme for small businesses. It will offer four-year funding over the next 12 months.
The central bank's Financial Policy Committee also lowered the counter-cyclical capital buffer for banks to zero from 1%.