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Interest rate could drop to just 1 per cent
Sri Carmichael, Consumer Affairs Reporter21 Jan 2009
INTERESTS rates look set to be slashed to a record low next month after the Bank of England today revealed there was unanimous support for this month's cut.
Its monetary policy committee cut interest rates by 0.5 per cent a fortnight ago to 1.5 per cent, the lowest level in the bank's history.
One member of the nine had wanted a full percentage point cut. A fifth successive drop is now likely. Interest rates have already been cut by three and a half percentage points since October.
Howard Archer, chief UK economist at IHS Global Insight, said the committee minutes did little to dilute expectations that rates would reach a record low of one per cent next month.
"They portray a generally very downbeat view of the UK economy," he said.
Mr Archer forecast interest rates would fall to a low of 0.25-0.5 per cent by the summer, with a zero rate "far from inconceivable".
The committee decided a cut was needed because of the risk of the downturn deepening.
Reader views (4)
Savings rates should be low to reflect the current base rate. However Mortgage rates can't come down too low or lenders will lose money, as some trackers are paying 1% below base rate. Its about a balanced score card. The Libor has come down, the base rate has come down. Now we need lenders to start lending, which in turn will bring down mortgage rates.
- Gavin Carley, Reading, 22/01/2009 19:06
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The High street bank rates should not be more than twice the Bank of England rates and that applies to the mortgauge lenders.
Even at that rate they are making a hell of a profit!!
That they are in the mess that they are is soly down to their own greed, and nothing else.
ENFORCE THE HIGH STREET BANKS AND MORTGAUGE Companies TO DROP THEIR RATES ACCORDINGLY
- A Winsley, london, 21/01/2009 16:15
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This will continue the punishment of millions of savers, and help a couple of thousand on the right type of mortgage. Why would they do it?
- Stephen, London, 21/01/2009 15:55
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They may be lowering the interest rates, but my mortgage is still 4.5% (and that is with .5% comming of recently)
- E Sullivan, London, 21/01/2009 15:38
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