N&G News
Massive Base Rate Cut
The Bank of England has agressively reduced interest rates by 1.5% to 3%. Most analysts were expecting a cut of between 0.5% and 0.75%, with some, including us, hoping for 1%. The MPC deemed the move necessary in order to keep inflation within its 2% target range over the medium term. This shows that there has been concern over inflation reducing rapidly, and we believe the Bank of England is now acting positively and reacting to the current market conditions. Making such a large cut also gives banks the opportunity to pass more of this rate cut onto borrowers than they would have been able to do with a smaller cut in rates. This is a spectacular result, and paves the way for furher cuts, with the expectation that interest rates could now fall to as low as 2%.