|
Interest Rates Cut to 4.5%
In the 100th meeting of the monetary policy committee
the widely anticipated drop in interest rates was indeed decided
upon, with a cut of 0.25% announced. The reduction to the now
4.5% is the first alteration to the base rate of interest since
August of 2004, and will certainly be a welcome move by the retail
and manufacturing sectors.
Business leaders have commented that this was the right move
by the Bank, and should help to alleviate the pressures faced
by the manufacturing sector that has recently experienced a recession.
It is hoped that this cut will ease the pressures on the UK economy
and help to stimulate the growth necessary for a recovery on the
high street and the economy as a whole following a successive
four quarters of below trend growth. Traditionally a reduction
in interest rates stimulates consumer spending as mortgage costs
fall and people tend to have more disposable income.
This will come as good news to mortgage holders, as they will
see a reduction in their monthly repayments, for a typical mortgage
of £80k this will work out to a saving of around twelve
pounds per month.
For those with savings this is a negative move, and in fact most
savings account providers had pre-empted this move weeks ago by
reducing the rates they pay, for example one of the major players,
ING Direct, revised their rates down from five to 4.75% in anticipation
of the outcome of this month’s monetary policy committee
meeting.
|
