Interest Rate Slashed to 3%
The Bank of England’s Monetary Policy Committee has slashed the UK Interest Rate by 1.5%, a rate far greater than was widely anticipated by economists.
A rate cut was expected after recent reports that the UK has been sliding into recession. The last rate of 4.5% had been achieved after a surprise 0.5% cut in interest rates on the 8th October, a day earlier than expected so that it coincided with the banking sector bailout plans announced across Europe.
Many predictions for today’s cut were of at least 0.5% with some sectors pushing for a whole 1.0% rate cut to boost the flagging economy, particularly after yesterday’s news of a 20% fall in new car sales in the UK. Inflationary pressures are thought to be no longer so much of a factor after the price of a barrel of oil fell from summer highs of near $140 a barrel to below $60 a barrel in recent days and this has allowed the MPC room to make the incredible 1.5% cut.
This is the greatest cut in interest rates since the BoE was made independent in 1997 and the UK’s lowest level of interest since 1955.
In the Eurozone the base rate was cut from 3.75% to 3.25% whilst in the USA the rate still stands at 1.5%