Bank of England decided to lower
reserve interest rates to 0.25%.
This means the central bank wants to reduce the interest paid on reserved stash, discourage bankers
parking too much money in central bank.
With smaller return from central bank interest rate, this is just a policies that central bank
hope the bank will use the money to invest or buy bonds.
In short, this has nothing to do with borrowing rates.
Most country central bank enact rules that require banker to deposit some reserved, which the stash can be used when one of the banker face a sudden surge of withdrawal,etc. It is just a measurement to prevent banker gone rogue, loan too much money to borrower than a safety threshold. But money in this reserved are "unproductive", thus most central bank will give some interest return.
However, in high risk condition or common rent seeking situation , bankers might do the opposite, they
park more money in central bank to earn some dime, when the bond or other money making tools just too expensive or risky to them.
The speculation follow by the question are mostly flaw, perhaps IMHO, those are fallacy impost by media.
In real life.
1. i. Moving money is costly ii. it is difficult to find a safe haven that is cheap.
2. In fact, the move is just pragmatic (Beware that pragmatic doesn't mean it is logical or good decision)
And to OP question title :
What stops a government in partnership with its central bank from lowering interest rates and then borrowing at this lower rate to fund investments?
- Interest rates DOESN'T SOLVE the problem of money supplies.
- Central bank only control money supplies, it doesn't do the "borrowing"
- Government borrow money by printing bonds. HOWEVER, if too much bonds are printed and too much money are used to buy the bonds, it will affect liquadation of money. So there is always some "money printing" (AKA inflation) action follows.