Calls for 1% base rate cut
November 9, 2008
The Bank of England is being urged to cut the base interest rate, and some groups are calling for a rate cut of 1% in order to try and weather the imminent recession. It is thought that there could be a 0.5% rate cut or even a 1% cut at the next Monetary Policy Committee meeting in November. It is also thought that other central banks will be slashing interest rates again following the surprise October rate cut, including the US Federal Reserve, which is expected to cut the base rate to just 1%.
Even Sir Howard Davies, a former Deputy Governor of the Bank and chairman of the Financial Services Authority from 1997 to 2003, said that he would consider a 1% base rate cut. He said: ‘I would definitely be going for half a per cent…I might well go for 1%. The Federation of Small Businesses also called for a cut from the current 4.5% to 3.5%, possible as early as this week.’
Another official said: ‘Inflation is yesterday’s story. it’s about the economy now.’
Another official said that further base rate cuts were necessary in order to boost the economy, and one official said: ‘With the banking sector still on its knees and a host of appalling economic news posted over the past few weeks, the need for further monetary stimulus is apparent.’
If the Bank of England does cut the base rate by 1%, as it is being urged to do by the Federation of Small Businesses amongst others, the base rate will fall from 4.5% to 3.5%. Some are hoping that the base rate cut will be announced before the scheduled meeting on 6th November.
- Consumers could be hit by rising mortgage rates from lenders Since August 2006 the base interest rate has risen five times in the UK, taking it from 4.5% to 5.75% in just under one year. Since July of this year struggling homeowners have been relieved
- Central bank keeps base rate on hold again The Bank of England has announced that the base rate will be kept on hold for the third consecutive month following this week's Monetary Policy Committee meeting. The decision has come as no great surprise
- Lender expects 80% fall in mortgage market According to a recent report from one of the UK's major lenders the mortgage market in the UK could plummet this year, and could end up at just one fifth of the level that it
- Mortgage lending restrictions put in place by smaller building societies A recent report has shown that the global credit crunch is also taking its toll with smaller building societies as well as larger banks and lenders, with a number of smaller building societies reporting that
- More and more people turn to Provident Financial The effects of the credit crunch in the UK has made it increasingly difficult for consumers to get finance of any sort, and an increasing number of lenders are taking a firm stand when it
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