The Bank of England’s Monetary Policy Committee today slashed interest rates by one-and-a-half per cent - the biggest rate cut since 1981.
It now stands at three per cent - the lowest level since 1955.
Last month it cut rates from 5% to 4.5% in an emergency move co-ordinated with other central banks.
There had been widespread calls from industry for a major cut as the country begins to face up to the prospect of a deep recession.
The cut comes after a raft of weak economic data recently.
It is the first time the Bank has cut rates by more than half a percentage point since gaining its independence in 1997.
22 Comments
ABOUT TIME THE HARD WORKING TAX PAYING PUBLIC GOT A BREAK.
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The real question is will we see any of this cut or will the banks just keep the extra money for themselves. I predict the latter, bail out the banks with Tax payers money then get screwed by said banks.
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Agree with JonnyB - at least a part of the percent will not be passed on
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It won’t cure the problem. The problem is with the over inflated cost of house prices. First time buyers can’t get on the ladder and thats whats slowed everything down.
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The base rate is nothing to do with Bank costs.
They get money to use at libor which is much higher at the moment.In their precarious state will they worsen their situation more?No.So they will not pass it all on.
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This rate cut is welcome. Depending on your mortage, might be passed on or might make little difference.
It does however put pressure on the lenders to cut the cost of lending. Or else people go to someone that has cut the cost.
It isn’t good news for savers though - lower interest rates mean less income from savings.
Be interesting to see what lenders do over the next few days.
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I’m afraid we all have to take more responsbility with our finances. We are too used to an i want it all way of life and we borrow so much money to get it and go into so much debt. Yes i know we all need debt some times for essentials but we are all to blame in someway for whats happened. I hope the rate cuts keep coming but even at their lowest borrowers only got about 4% on their morgages in the old days.
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Banks will just keep the rates the same. Something has to pay banks bosses the millions of pounds of year they ‘earn’.
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Those in debt will benefit.People with savings will lose out.Low interest rates will not attract foreign investment and the pound will suffer relative to the euro or dollar.If you’re going on holiday start saving now it’s probably gonna cost you more for your beer, sangria etc.
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It sounds good news, but is it just Government spin again trying to make the mess Mr Bean as got us in sound a tingy bit better.
Great news for folks on Variable rates but most are on fixed rates so who does it help? not savers…. well them who can afford to save.
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Ummm….Dudley bloke - most are on variable rates.
Fixed rates tend to be short term - useful when the rates are going up, not affected by rate drops.
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Should make Collins’ payments on Mick’s mortgage a bit cheaper.
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it will make no difference to the housing crash the shares dived meaning the city says its too late
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People seem completely sure that the banks will pass on the full cuts. Erm, the banks are not a public service (even with the bail out money.)
They’re just there to earn money for shareholders. As a bank worker, I know that we try and help customers as much as we can, but at the end of the day, if a bank has to choose between its staff, customers and shareholders - well, staff get the sack, customers don’t get the full benefit of the rate cut, and the shareholders get their money.
I wish people would point this out more often!
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Well said no14. Thats the root cause of our world economy collapse-share holders wanting payouts. Lets hope the government puts this right. PLC companies are the bain of our society full of greed . Give it all back to the people who matter.
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Chris, shareholders want payouts. Or they can take their money elsewhere. They do own the company.
Enough pull out, the bank is in trouble.
PLC companies are also the backbone of our country. Your pension fund, if you have one, will depend on them. As will many other companies who rely on them for trade.
Not forgetting the workers who are employed by them.
Us shareholders can choose where we put our money. Rather than invest in a PLC we could always stick it under the mattress. Might be safer, but won’t benefit the country in any way.
Martin
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Sorry i disagree with you Martin but these PLC’s have raped our countries work force for years and still are. I worked for a private company that was bought out by a plc and all it was interested in was how much money it was going to get per month in profit before our company took out its over heads. It was eventually bought out by the mangement who have reaped rewards with it. Sorry but this countries problems are not helped by share holding companies. Look at the state of the railways in share holders hands. Asset strippers are all share holder companies are good for and i’m not talking about the private little building society and its members either. The best thing for a company directors wallet is to float yes but in the long run its the worst thing for the workers in any floating company. Oh yes we all know they give workers share whoopy doo they don’t reap a 100th as much as the big wigs,and they are all paying dearly now arn’t they?
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You also find martin that it takes a great private management team to build a company up to a good value to float and a bunch of cowboy share holders to ruin a company with an i want more money and big executive bonuses.Lets hope Mr Brown keeps to his word and stops it all.
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Sorry i’m on my soap box today but ask why some of the big PLC pension comapnies have reduced our pensions and yet have still payed out fat bonuses to directoers WHY? How have they earned them when our penions have took a fall? I was a pension member of just one of these companies who announced cuts and then announced massive half mill bonuses for their top man. In the end he refused to accept the bonus i wonder why? Another PLC company looking after the large share holders and not you and me Martin because we probably don’t have enough invested to make a difference. No one get s a bonus out of my money unless it’s me first, AND THATS THE WAY IT SHOULD BE.
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Sorry guys, I disagree.
I have shares in several companies. They do a good job in my opinion, based on my knowledge of their industry, the company and its activities.
And makes a difference to many pension schemes.
You don’t want to give us dividends? Fine, who needs their pension to be worth something anyway eh? Or who needs a company to be able to expand and take on more workers, or keep going with existing workforce eh?
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Any company that expands and takes on more workforce is good for th eeconomy. as for pensions i suppose we could survive without them as long as we get the government one,because most of u will have to won’t we? Don’t think the comapnies have done a good job lately have they or did i just dream about massive government intervention with many billions of pounds. Hope ypu havn’t invested with any of these companies. Everyone deserves dividends if they have earned them. trouble is no one has and thats the problem. We all own the banks so when do we get our share dividends then eh? It’s the muppets at he top who benefit off your hard earned investments and its timer you realised that. You’ll get a better rate at a private building society not a plc.
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I tend to average about 10% return on stock market investments, including dividends. Rather more than the bank savings schemes will give me.
And no, I don’t have any investment in banks, haven’t for well over a year. Some things are too risky.
Plenty of companies have made profits. Not all are hit hard enough to make losses, though any changes to the economy can affect turnover for many companies.
As for the state pension, hardly worth much. I’d rather not rely on the government putting my income up by £2 a week while my bills go up by £10 a week thank you.
Even the new pension scheme from 2012 can be better than simply relying on the state.
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