Base rate down to 4.5%

13 October 2008

Last week (8th October), the Bank of England’s Monetary Policy Committee (MPC) voted to reduce the UK’s base rate from 5% to 4.5% – the largest cut since November 2001.

Boosting consumer confidence, helping many people in debt make their monthly loan and mortgage payments, the base rate cut will substantially benefit many people and many areas of the economy. According to Stephen Robertson, BRC Director General: “This bold action by the Bank of England is the right decision and will be welcomed by hard-pressed customers and retailers.”

“The banking crisis is undermining consumer confidence,” Mr Robertson continued, “and a significant rate cut was necessary to restore confidence while stimulating the High Street and the rest of the economy.”

It’s also the first rate cut since April – for the last six months, high levels of inflation have led the MPC to keep the base rate at 5%. Today, however, inflation expectations are diminishing, making this rate cut (and possible future cuts) an option.

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