Rates slashed to all-time low
Updated on 08 January 2009
The Bank of England cuts interest rates by 0.5 per cent to 1.5 per cent, the lowest rate since the bank was founded in 1694.
Interest rates in the UK have never been lower. The Bank of England decision to cut the base rate by half a percentage point to 1.5 per cent underlines its concerns about the state of the economy.
But with the bank running out of levers to influence the economy, the prime minister and the chancellor today had to deny growing speculation that there were plans to print more money to ease the financial situation.
The cut was expected by most economic forecasters, but that does not make it any less dramatic.
The Bank of England is administering radical treatment to an economy that is sickening faster than it has done in decades. But is the medicine working?
Expert reaction
Head of mortgages for Lloyds TSB Stephen Noakes and economist John Hawksworth, from PriceWaterhouseCooper, give their instant reaction to the interest rate cut.
Advice for savers
The Bank Of England's decision to cut interest rates is strong economic medicine designed to help out those with mortgages but there will be side effects for savers, who have seen dramatic cuts in the rates being offered by banks.
Last year, savings accounts were offering rates of as much as seven per cent. Now more than a third of savings accounts for deposits of less than £5,000 pay interest of one per cent or less. So is there anything savers can do?
Clare Francis, editor of moneysupermarket.com, has some advice.
