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Base rate cut 'was the right decision'

Base rate cut 'was the right decision'

Category: Loans

Updated: 09/02/2009
First Published: 09/02/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Bank of England's decision to lower the official base rate has been welcomed by the British Chambers of Commerce.

According to David Kern, economic advisor at the body, the rate is unlikely to fall much further than its current level of one per cent.

He described last week's 0.5 per cent cut as "the right move", suggesting that lenders are becoming more likely to pass on the reductions that have been made over the last five months.

"By and large the banks have been rather slow before October. Since October I think they have moved quite forcefully," he remarked, adding that measures other than cuts could now be needed to stimulate the economy.

The Bank's monetary policy committee has dropped the rate from five per cent in September, steps that could mean secured loan customers are paying less in interest charges.

Last week's decision brought the base rate to its lowest level in the Bank's 315-year history.

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