9Oct
Bank slashes interest rates
The Bank of England has announced a 0.5 per cent cut in interest
rates, the largest reduction in the base rate since November
2001.
In a move that came a day earlier than the scheduled announcement
of the monthly rate decision, the monetary policy committee (MPC)
revealed that it was taking the action in collaboration with the US
Federal Reserve, the European Central Bank and the central banks of
Canada, Sweden and Switzerland.
The MPC said that the inflationary prospect had shifted "decisively
to the downside", with too tight a monetary policy likely to lead
to consumer price index inflation falling well below the two per
cent target set by the government.
Consumers with tracker mortgages will automatically benefit, while
the reduction in the base rate may lead to mortgages becoming
cheaper in general if lenders pass on the cut.
The news came hours after the government announced a new £200
billion facility to increase liquidity in the banking sector, a
move the MPC welcomed.
