Base rate at lowest in over three centuries

Following the most recent cut to the UK base interest rate the base rate has now dropped to its lowest level in over three centuries.

In fact, the base rate is now at its lowest ever in the history of the Bank of England, which spans over three hundred years. Following last week’s Monetary Policy Committee meeting, where interest rate movement is decided, the Bank of England announced that the base rate was being cut by a further 0.5 percent.

Just four months ago the base interest rate stood at 5 percent, but after a series of dramatic cuts over the past few months the base rate has now fallen to just 1.5 percent, and there are rumours and speculation that it could fall as low as zero in the months to come.

Government officials are hoping to boost the economy by reducing the base rate and increasing affordability for consumers, which in turn could increase spending, but much of this will depend on how quick banks are to pass on the rate cuts to borrowers.

One official said that the interest rate cut had been a welcome move, but added that it was important that the central bank did not stop at this and continued to cut the base rate.

She said: “With survey data continuing to languish at record lows – manufacturing and services surveys in the past few days have confirmed that activity is falling sharply – we see no reason for the Bank to hold back in cutting interest rates to 1% or below in the coming months.”

However, there are some industry groups and officials that have stated the rate cut was not enough, and that the central bank should have applied a bigger cut given the ongoing recession and economic downturn.

Tags: series, Late 2000s recession in Europe, rate movement, base rate, economy, meeting, Central bank, interest rates