Interest Rates Cut to 3%
Category: Economy. Date published: 06/11/2008
Interest rates have been cut today to the lowest since 1955. Reduced by 1.5%, the new 3% rate follows on from last months reduction. The action has been taken following growing concerns that the economy is looking tougher than many would have suspected just a year ago. It is widely agreed in financial circles that interest rates have to be cut and will reduce even further in a bid to fight recession in the UK.
In Europe too, eurozone interest rates were cut by the European Central Bank by 0.5% to 3.25% demonstrating wider action to combat the fact developed economies are expected to contract, something we haven’t seen since the Second World War.
What does this mean to us?
Interest rate cuts will benefit those of us with a tracker mortgage for example. According to the BBC Finance Website that will help 40% of mortgages in the UK. This will put more cash in the “pockets of the masses” at a time when it really is needed.
However the impact of recession in other parts of the economy could affect some of us in terms of employment levels which are expected to increase. There is no consolation that a typical mortgage might reduce by £100 or so each month to those made redundant when their income has vanished.
In short todays news is an expected yet welcomed piece of news that hopefully helps many but the reality that the “no boom and bust” promise has been broken is now more than evident!
We’re in for a tough year next year so be sensible with your finances and keep an eye on your bank to see that the reductions in interest are benefitting you.
