Every month, the Bank of England’s Monetary Policy Committee meets to set the base interest rate for our economy and yesterday they had that meeting.
The MPC was no doubt feeling the pressure as experts such as the British Chamber of Commerce and the CBI called for them to make a 0.5 per cent interest rate cut in an effort to help our economy. Since April, the base rate has remained steady at 5 per cent and they have avoided reducing the rate because of fears of inflation rising even higher. A cut of 0.5 per cent has not been seen since November 2001, following the 9/11 attack.
Even billionaire Sir Richard Branson has called for them to slash interest rates by up to 1 per cent and for all UK savings to be guaranteed. He said:
“I think there should be a very big interest rate drop this Thursday, as much as 1%.”
As shares fall and the British Chamber of Commerce predict job losses of up to two million over the next few years, but there will be few that envy the job of the MPC at the moment.
Yesterday, the MPC did actually cut the base interest rate by a whopping 0.5 per cent. This does not force banks to follow suit (except in the case of tracker mortgages, where the terms and conditions say the bank has to), so we wait to see how many will do so.