bank of england cuts intrest rates again

[el guapo]

it down to 1.5 percent now 315 year low

The Bank of England has cut interest rates to 1.5%, the lowest level in its 315-year history, as it continues efforts to aid an economic recovery.

The half percentage point reduction brings interest rates below 2% for the first time since the Bank of England was founded in 1694.

Manufacturers' association EEF said the move was "too timid", and that the Bank should have cut rates further.

The Bank has now reduced rates four times from October's 5% level.

Explaining its decision, the Bank said the level of contraction in business activity had "increased during the fourth quarter of 2008, and that output is likely to continue to fall sharply during the first part of this year".

It added: "Surveys of retailers and reports from the Bank's regional agents imply that consumer spending has weakened."

Sit tight?

BBC economics editor Hugh Pym said the Bank was now being more cautious after the sharp cuts in interest rates in November and December.

"There is a hint in its statement that it may sit tight for a while to assess the impact of the big reductions over the last couple of months," he said.



Rates are now at their lowest level in the Bank's history

Hetal Mehta, senior economist from the Ernst & Young Item Club, said the cut to 1.5% was "appropriate", but that the Bank should not stop there.

"With survey data continuing to languish at record lows - manufacturing and services surveys in the past few days have confirmed that activity is falling sharply - we see no reason for the Bank to hold back in cutting interest rates to 1% or below in the coming months," she said.

Mortgage impact

Most mortgage customers with tracker deals will automatically have the cut in interest rates passed on to them by their bank or building society.



The moment the cut was announced

Customers with an average £150,000 repayment mortgage will see their monthly bill drop by £46.

Those tracker deal customers with a £250,000 mortgage will see their monthly payments drop by £76.

But those on standard variable rate deals must wait for a decision from their lender.

While Lloyds TSB, HSBC and Nationwide have already said they will pass on the reduction, most of the other lenders are currently saying their rates are under review.

The pound, which has fallen in recent months, rose to a three-week high of 1.11980 euros following the rate cut, and also gained two cents against the US dollar to $1.5247.

[gmc]

Too bad if you rely on investment income or just save money regularly. He's really got it ion for those who are prudent with their money doesn't he.