The Bank of England has made a shock interest rate cut, leaving the base rate at its lowest level since 1955. The one and a half percentage point cut is the most dramatic since 1981 and reduced interest rates to 3 per cent. Experts have said that the cut demonstrates the government’s concern that the UK is entering a long recession, whilst the size of the cut ensures there will be pressure on banks to pass on the reduction to consumers.
Chancellor Alistair Darling said, ‘I think it’s essential that the banks do pass on the benefit of lower interest rates to people and to businesses. Banks need to understand that they need to help their customers’. Meanwhile, shadow chancellor, George Osborne, said, ‘This is a shot in the arm for the economy, but it shows how sick the patient is’.
Major lenders have said that their rates are ‘under review’ in the wake of the surprise cut, whilst Lloyds TSB has promised to pass on the cut to its standard variable rate (SVR) mortgage customers. SVR loans account for roughly 10 per cent of home loans, meaning the majority of lenders are likely to take their time over deciding whether to pass on the cut to borrowers.
Bank of England Cut Leaves Interest Rate at Lowest Level in 53 Years
Bank of England Cut Leaves Interest Rate at Lowest Level in 53 Years
Fri, 07 Nov 2008
Recommended links
Leading current accountsCompare pension providers
High interest isas
Bad credit loan lenders
Leading savings accounts
Barclays bank to strengthen capital position
FSA warns banks to link bonuses to risk
| Banking news |
|---|
| British Banking Association Reveals Mortgage Approval Slump - Wed, 24 Dec 2008 |
| Leading Investment Bank Cuts Partners Pay - Wed, 17 Dec 2008 |
| Banks Agree to Free Up Credit for Small Businesses - Wed, 10 Dec 2008 |
| More News |
