Interest rates cut to 5%
As expected the Bank of England has cut interest rates to 5%
Analysts had been expecting the BoE’s Monetary Policy Committee to drop the rate under the continuing uncertainty over the worldwide economic credit crisis.
The UK interest rate was cut in December (to 5.5%) and remained untouched in January. A further cut in February (to 5.25%) was followed by a decision to maintain the rate in March. April’s cut of a quarter of one percent is seen as a further attempt to help the country’s slowing economy.
The squeeze on global credit so far hasn’t been as severe in the UK as it has in the US where rates have been slashed to prop up their faltering economy. However, the economic outlook for the UK still remains cool, despite an increase in factory gate output. The CBI predicted slower economic growth than the government was indicating, but growth is still growth and the chancellor yesterday stated his confidence in the British economy.
Whether or not the banks are quick to pass on the rate cut to customers remains to be seen.