 The Bank of England today cut interest rates by 0.5 per cent to the lowest level in the 315-year history of the central bank.
The monetary policy committee (MPC) pushed the... Full Story
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Today's news roundup
Base rate slashed to 1.5%
Thursday, 08 Jan 2009 12:10
The Bank of England has taken the historic step of cutting interest rates below two per cent for the first time in its 315-year history.
The rate has been cut by 0.5 per cent to 1.5 per cent.
The reasoning behind the dramatic move is to kick-start lending, still frozen in the wake of the credit crisis.
Getting the engine of the economy running smoothly again is crucial amid daily reports of job losses and collapsing businesses.
Although by setting the base rate of interest is a powerful tool at the Bank's disposal, it is not going to be enough on its own.
Borrowers have been warned not to expect cheaper loans, while savers are seeing their returns diminish.
New and bold measures may be needed to make a real difference to the economy.
Rumours today that the Treasury is considering giving the Bank new powers to print money may indicate the government is ready to consider controversial schemes to restore confidence and get the market moving again.
Whatever the government decides to do, the consensus is that it must move quickly to prevent the recession from becoming more serious than has been feared.
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