The emergency cut is seen as helping British business to cope with the impact of the Coronavirus by reducing the cost of borrowing.
The reduction comes on the eve of the Budget due at lunchtime today when the Chancellor is expected to announce other measures to help business.
There will also be help for commercial banks to lend to small and medium-sized firms.
The cut follows a recent reduction in the US Fed rate.
Prior to the Covid-19 outbreak UK GDP growth had been projected by the Bank to pick up a little in 2020.
The Chancellor is expected to update the country on the economic impact of Coronavirus later today.