Bank of England cuts rates by 1.5%

The Bank of England cut the base rate by 1.5 per cent yesterday (October 6th).

A statement from the Bank claimed the global banking system has experience its "most serious disruption" for almost 100 years but measures taken by central governments had begun to ease pressure on economies.

However, the institution warned borrowers that mortgage credit and business loans were likely to remain restricted in the coming months as a result of the "tightening up" of the money markets.

"Residential investment has fallen sharply and the prospects for business investment have weakened," the bank said.
Adding: "Economic conditions have also deteriorated in the UK's main export markets."

It said the monetary policy committee had to balance downward pressure from the slowing of the economy with upward pressure from rising inflation which remained above the Bank's two per cent target.

According to the Times, interest rates in the eurozone are higher than those in the UK for the first time since Europe introduced the single currency in 1999.