Bank cuts rates to lowest-ever level

08/01/2009

Interest rates were reduced from two to 1.5 per cent by the Bank of England today.

The new reduction brings the Bank's official lending rate to its lowest level since the institution was founded in the 1600s.

An aggressive policy of rate-cutting has been pursued by policymakers from last October, due to concerns over economic growth.

This is because cheaper credit from lenders passing on the Bank's reductions could boost GDP - with consumers having more money left over to spend on goods and services.

Some analysts expect the economy to contract by up to three per cent next year, although the government expects negative growth of around one per cent.

The Bank said in a statement: "The world economy appears to be undergoing an unusually sharp and synchronised downturn. Measures of business and consumer confidence have fallen markedly.

It added: "The availability of credit to both households and businesses has tightened further, pointing to the need for further measures to increase the flow of lending to the non-financial sector."

Tags; Debt Management and Banking, Young Family Finances, Retirement Money Problems, Credit Card Lifestyle, Recent Graduate Debt,

• Share
• 
• 
• Store
• 
• Follow
•