Bank cuts interest rate
9.10.2008
As part of a coordinated strategy with other central banks around the world, the Bank of England cut the base rate of interest a day earlier than it was scheduled to.
On Wednesday, the Bank announced the base rate would be reduced by 0.5 per cent to 4.5 per cent - the first change since it was cut to five per cent in April this year.
The last time the Bank's monetary policy committee (MPC) voted for a 50 basis-point cut was in November 2001.
Commenting on the move, Abbey said the "deterioration in international credit and money markets … lies at the heart of the decision".
However, while some have predicted this may help to improve the availability of loans and other forms of finance, others continue to have a cautious outlook.
Virgin Money argued that the decision may be "too little too late", stating that the MPC ought to have "acted sooner" to prevent market conditions from tightening to such an extent.
Lenders will now need to "get their nerve back" before there are "positive" signs of a recovery, the firm added.
On Wednesday, the Bank announced the base rate would be reduced by 0.5 per cent to 4.5 per cent - the first change since it was cut to five per cent in April this year.
The last time the Bank's monetary policy committee (MPC) voted for a 50 basis-point cut was in November 2001.
Commenting on the move, Abbey said the "deterioration in international credit and money markets … lies at the heart of the decision".
However, while some have predicted this may help to improve the availability of loans and other forms of finance, others continue to have a cautious outlook.
Virgin Money argued that the decision may be "too little too late", stating that the MPC ought to have "acted sooner" to prevent market conditions from tightening to such an extent.
Lenders will now need to "get their nerve back" before there are "positive" signs of a recovery, the firm added.
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