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Base rate cut by 0.5 per cent

Base rate cut by 0.5 per cent

Category: Mortgages

Updated: 06/02/2009
First Published: 05/02/2009

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 It is now over 6 months old so the content may be out of date.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 has lowered the official base rate for the fifth consecutive month.

A 0.5 per cent reduction agreed at the monthly meeting of the Bank's monetary policy committee (MPC) brings the rate to one per cent - a new record low.

Explaining the decision, the MPC cited an increasing risk that inflation will undershoot its target of two per cent in the medium term.

As a result of the cut, secured loan / mortgage customers could be set to see interest payments reduced, should lenders pass it on.

And clues about the future direction of the rate may be provided on February 18th, when the minutes of the meeting will reveal how each MPC member voted.

Vince Cable, the Liberal Democrat shadow chancellor, said of the move: "The Bank has to do what it can to reduce the cost of credit in the face of deepening recession. However, there is now only very limited scope for cutting interest rates."

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