Record low for UK interest rates
Following the recent Monetary Policy Committee meeting held last week the Bank of England has announced that the UK base interest rate has been cut yet again, falling by 0.5 percent from 2 percent to just 1.5 percent.
The latest fall has taken the base rate to its lowest level in history. With the Bank of England having been founded in 1694 this means that the base rate is now at its lowest levels in well over three hundred years.
The government hopes that the further cuts in the base rate will help to aid economic recovery, by leaving consumers with more cash in their pockets and increasing spending. However, whilst the move to cut rates again has been welcomed some industry groups said that the cut should have been larger, with the EEF stating that the cut was too timid and that the central banks should have made the base rate cut larger.
After announcing its decision to cut rates again the Bank of England stated that the level of reduction in business activity had “increased during the fourth quarter of 2008, and that output is likely to continue to fall sharply during the first part of this year”.
It also said: “Surveys of retailers and reports from the Bank’s regional agents imply that consumer spending has weakened.”
Another official said that the cut had been appropriate, but that the central bank should ensure that it continued to cut rates, stating: “With survey data continuing to languish at record lows – manufacturing and services surveys in the past few days have confirmed that activity is falling sharply – we see no reason for the Bank to hold back in cutting interest rates to 1% or below in the coming months.”
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