Latest base rate cut is "virtually meaningless" - Loans - News - Moneyfacts


Latest base rate cut is "virtually meaningless"

Latest base rate cut is "virtually meaningless"

Category: Loans

Updated: 09/03/2009
First Published: 09/03/2009

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 It is now over 6 months old so the content may be out of date.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 most recent base rate cut is unlikely to have a significant effect on the UK economy, an expert has argued.

Last week the Bank of England halved the rate, bringing it to 0.5 per cent and marking the lowest it has been in the institution's 315-year history.

But head of advice at Hargreaves Lansdown Danny Cox suggested that the measure is unlikely to achieve the desired results.

Describing the move as "virtually meaningless", he said: "Going from one per cent to half a per cent is so small it signals that the previous cuts haven't worked properly."

The six consecutive reductions may have led to cheaper interest payments for consumers with secured loans , but Mr Cox stated that the rate is unlikely to be brought any closer to zero per cent.

Instead, he explained, the Bank will need to rely on quantitative easing to stimulate the economy - a tactic it has now turned to with the announcement of a £75 billion asset purchase.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Regulator to take closer look at high-cost credit

When used well, credit can be a viable way to help make ends meet and balance the books – but the problem comes when that credit is of the high-cost variety. The regulator has will be taking a closer look at the sector to see what else can be done.

The payday loan market is still broken

The payday loan market has been under fire a lot in recent years, and as a result, the financial regulator stepped in. But has it made a difference? Unfortunately, it looks as though there’s still a lot of work to be done.

Get a record low rate loan - if you qualify

Competition in the personal loans market is as hot as ever, so much so that one loan provider has slashed rates to the lowest on record – but only to those who fit the bill. The shopping bill, that is…