Bank of England cuts interest rates to all-time low 0.5%

March 6, 2009 by Brendan

News

Yesterday the Bank of England cut interest rates once again to an all-time low to 0.5%, and has promised to boost the supply of money to help the economy recover. It has pledged to inject a further £75 billion into circulation, which is known as ‘quantitative easing’.

This reduction marks the sixth time that the Bank of England has cut interest rates in less than five months.

Mervyn King, the Governor of the Bank of England, stated that the plan to revive the economy and the housing market would work, eventually.

Nothing in life is ever certain, but these measures we think will work in the long-term.

I don’t know how long it will take, much depends on the situation in the rest of the world. But if countries work together, these measures will I believe eventually work.

Alistair Darling, the Chancellor of the Exchequer, said that the increased money supply was essential for the UK economy to recover. He did admit that the sixth cut in interest rates in five months would be further bad news for savers, but that it was essential if Britain is to recover from the recession.

In addition, the ‘quantitative easing’ policy devised to kick-start the banks to lend more money should see more mortgage products become available to buyers, and potentially with better rates of interest.