Interest rates Cut to 1.5%

January 8, 2009

Interest rates have been cut to 1.5% by the Bank of England, the lowest rates have been for 300 hundred years and an indication of the dire position of the UK economy.

Previous rate cuts haven’t been passed in full onto mortgage customers by Banks and they are unlikely to pass this cut on either. And neither have rate cuts encouraged Banks to lend confidently to individuals and businesses. The bigger concern with the rate cut is that savers who have been prudent will see their interest earnings reduce further which doesn’t encourage people to save and manage their finances sensibly. For this reason, David Cameron’s announcements on tax relief for savers a few days ago is very welcome.