Base rate cut to lowest level in nearly sixty years
January 8, 2009
Earlier this month the Bank of England cut the base rate to its lowest level in nearly six decades, slashing it by a further 1 percent to just 2 percent. This brings the base rate to almost one third of the level it was at just over a year ago, when the base rate was still 5.75 percent. The central bank slashed rates in October, November, and December, cutting rates by a total of 3 percent in this period, bringing the base rate to its lowest level in fifty seven years.
However, whilst the base rate cuts have come as a relief to most homeowners and campaigners some banks are refusing to pass on the full rate cut, and some have not passed on any of the rate cut.
This means that many homeowners and borrowers may not feel the effects of the rate cut, and that the knock on effect will not be felt by the economy. The Prime Minister and the Chancellor both urged banks to pass on the rate cuts following the most recent cuts.
After the recent rate cut Gordon Brown stated: “If the banks pass the interest rate reduction on, and I hope and believe that they should do so, then it’s of benefit to homeowners and businesses right across the country.”
With regards to the rate cut one official said: “There wasn’t quite the shock value of the dramatic one-and-a-half point reduction in November. But we shouldn’t forget the scale of the Bank of England’s action. The cost of borrowing has been more than halved since early October, as the Bank got to grips with the rapid decline in confidence and spending.”
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