UK base interest rate falls to a new low

The base interest rate in the UK has fallen to a new low following the Monetary Policy Committee meeting in March. Following the meeting it was announced that the base interest rate was being cut once again, which was the sixth month in a row.

The March base rate cut was 0.5 percent, and this brought the base rate down from 1 percent to just 0.5 percent. This is now the lowest the base rate has been in the history of the Bank of England, which spans well over three hundred years.

In October the base rate stood at 5 percent, having gone through a series of cuts since reaching 5.75 percent in the summer of 2007. However, between October and March the Bank of England has been applying dramatic base rate cuts, taking the base rate from 5 percent to just 0.5 percent in the space of just six months. The government hoped that these base rate cuts would help to boost consumers spending, revive the economy, and stave off the worse effects of the recession.

However, there is not widespread glee over the base rate cuts. Although many borrowers are very pleased about the rate cuts because it means that they have to make lower repayments on their borrowing in many cases, there are many that are not happy.

Savers, for instance, have been hit hard by the rate cuts, and many are earning only slightly above zero on their instance savings accounts, which seems to be putting many people off saving. Pensioners that relied on the interest on their savings to live off are being pushed below the poverty line in many cases too.

The Building Societies Association has stated that the fierce base rate cuts means that many people are now reluctant to put their money into savings accounts because they are not earning any interest on their money, and this has reduced lenders’ access to money for mortgage lending.

Tags: building societies association, glee, bank of england, borrowers, widespread glee, UK base, March, Student Loans Company