5
Feb
Base rate drops to 1%
The Bank of England has announced that the official base rate has
been reduced further.
A cut of 0.5 per cent was agreed at this month's monetary policy
committee (MPC) meeting, bringing the rate down to one per
cent.
It sets the rate at a new all-time low and the MPC explained that
the move came due to the risk of inflation undershooting its target
in the medium term.
The base rate has now been cut by four per cent since September of
last year and the latest reduction could lead to cheaper interest
payments for mortgage holders.
Commenting on the decision, Liberal Democrat shadow chancellor
Vince Cable said: "The Bank has to do what it can to reduce the
cost of credit in the face of deepening recession. However, there
is now only very limited scope for cutting interest rates."
Clues about the future direction of the base rate may be provided
on February 18th, when the minutes of the MPC meeting reveal how
each of the nine members voted.
