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Bank of England cuts interest rate by half a point to 0.5%
The Bank of England has cut interest rates from 1% to 0.5%, the lowest in the Bank’s history, in a bid to stimulate the ailing UK economy.
This is the sixth time since October that interest rates have been reduced and the Bank also announced that it would increase the amount of money in the economy by £75bn to try and boost bank lending by using quantitative easing.
Quantitative easing – never before used in the UK – involves assets, such as government securities being bought. The Bank will borrow the money to purchase these, so no new money is actually printed.
Business groups have attacked the recent cuts, saying they have done little to encourage banks to lend more. A recent poll by the Federation of Small Businesses found that the majority of SME owners were against further interest rate cuts.
"Though this latest cut will help support business and consumer confidence, it is unlikely to have a dramatic impact on the cost or availability of credit," said Ian McCafferty, CBI chief economist.
Post Date: March 5th, 2009
This is the sixth time since October that interest rates have been reduced and the Bank also announced that it would increase the amount of money in the economy by £75bn to try and boost bank lending by using quantitative easing.
Quantitative easing – never before used in the UK – involves assets, such as government securities being bought. The Bank will borrow the money to purchase these, so no new money is actually printed.
Business groups have attacked the recent cuts, saying they have done little to encourage banks to lend more. A recent poll by the Federation of Small Businesses found that the majority of SME owners were against further interest rate cuts.
"Though this latest cut will help support business and consumer confidence, it is unlikely to have a dramatic impact on the cost or availability of credit," said Ian McCafferty, CBI chief economist.
Post Date: March 5th, 2009
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