Base interest rate pared to stimulate growth
The Bank of England cut the base interest rate to 2% yesterday, a 57-year low.
The move came just one month after the UK’s central bank slashed interest rates from 4.5% to 3%.
Investment and currency markets had anticipated the move after Bank of England Governor, Mervyn King, indicated a few days ago that it would be a possibility.
The UK’s biggest mortgage lender, Halifax, said it will not be passing on the full cut to its customers.
Halifax justified the decision by saying that all previous cuts had been passed on to customers, and that it must manage its business prudently and sustainably.
With consumer spending still in sharp decline, analysts are forecasting that interest rates could be cut even further, possibly as low as 0%, in an effort to stimulate the lagging economy.
Other commentators predict that the Bank of England will opt for the ‘nuclear’ option, which would mean a massive cash injection into the UK economy with the aim of exploding it back to life.
Category: Financials, Halifax Bank of Scotland News, Insurance News
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