The Bank of England today stunned the City by slashing interest rates by 1.5% to 3% – the biggest rate cut in almost 28 years.
The shock decision by the Bank’s rate-setters will please business leaders who had called for drastic action after a slew of gloomy figures revealed the state of Britain’s economy.
The rate cut is the biggest in the UK since a 2% cut in March 1981 – when the country was in the midst of a recession – and it brings rates to their lowest level since 1955.
The move will also be welcomed by those on tracker mortgages linked to the Bank’s base rate.
Lloyds TSB immediately announced it was passing on the full 1.5% to its variable rate mortgage customers.
Homeowners on standard variable rate mortgages should see their average monthly payments on a £150,000 mortgage fall by around £138 – if the cut is passed on in full.
Tory chairman of the Commons Treasury sub-committee Michael Fallon called for high street banks to pass on the rate cut.
He told Sky News: ‘We are in a battle against recession and everybody’s got to play their part – and that includes the banks.’
Stock markets immediately rallied on the news with the FTSE initially gaining almost 100 points before falling back slightly.
Earlier it had plunged by more than 3.5 per cent.
The Bank of England’s Monetary Policy Committee (MPC) said it made the move because of the ’substantial risk’ of undershooting its 2% inflation target as a sharp recession looms.
November 6th, 2008 at 7:49 am
The central bankers don’t take the necessary steps to solve once and for all the problem : stopping all activities with over the counter derivatives and impose an immediate settlement of those still existing products between banks and other speculative institutions. This wouldn’t need any penny from the tax payers nor from the treasuries. A very easy solution. Banks will certainly reject it because it doesn’t allow them to make some money when applying it.
Governments, central banks and all the supervising institutions are populated by stupid people. If not, they collaborate effectively with fraudulent bankers.
November 6th, 2008 at 10:21 am
Blair destroyed the previous capitalist system through the trivial mechanism of mega-inflation with respect to private house ownership, and the extension of house loans to just about anybody, regardless of circumstance, to keep the bubble inflating. When this model had been well established in the UK, it was exported to the rest of the banking systems of the West, especially the US. The earlier destruction of member owned mortgage companies (in the UK) and saving and loan companies (in the US) was essential to the plan.
The easily invoked greed of the sheeple (all brits have talked about for decades now is how much their house is worth) has destroyed the centuries old basis of capitalism, and placed absolute control of the world’s economy in the hands of Blair and the other demons. Oil is no longer the key natural resource, having been replaced by wood. Why? Because as I type, Blair has created a situation where the only significant manufacturing in the West is the printing of currency. Every one of our nations is currently turning forests into multiple trillions of dollars worth of worthless bank notes.
Never mind, guys. Obama’s war economy will solve your ‘little’ money problems, just as Hitler, Stalin, and Mao’s war economies kept their respective populations too busy to bother their masters.
November 6th, 2008 at 11:26 am
I haven’t a mortgage, so how about cutting rates on personal loans, banks???
Let’s just see how long this will last. I’m sure some other rates are going up, just to make up for the difference. Watch this space…
November 6th, 2008 at 5:49 pm
Brits have got used to constantly rising house prices ever since the housing boom caused by offshore oil workers in the 1970’s. We had a teachers strike in the 1980’s over the relative loss of pay, then a house price crash.
At this rate of interest rate cuts (0.25% per quarter), we will have 0% interest rates within three years. What happens then – do banks start charging people for depositing money with them?