Bank of England cut its key rate to 1%
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Bank of England cut its key rate to 1% Posted Feb 5th 2009 10:00AM by Connie Madon Filed under: International markets, Money and Finance Today, Financial Crisis The Bank of England cut its key rate by half a percentage point to 1%. However, even with the move, the Monetary Policy Committee (MPC) said that there was still disruption in money markets and the rate cuts have not yet had their full impact.
The MPC cited the sharp drop in output in the fourth quarter of last year and a similar drop early this year.
Nationwide, the UK’s largest building society announced that it reduced its base mortgage rate to 3% from 3.5%.The MPC pointed to the global nature of the current slowdown and stated that the supply of credit to households and businesses remained constrained.
The bank’s data showed how significant the credit squeeze is on non financial companies. In the fourth quarter, deposits of these companies fell by 6.9 billion pounds while lending grew only 1/10 billion pounds.
Jane Milne, business director of the British Retail Consortium said that the key issue is the “availability” of credit. She said that the Bank of England is walking a fine line between a weakening sterling and the need to revive the economy.
Banks in both the U.S. and England have money to lend. Do you believe that they just don’t want to lend it at these low rates?
Interesting… how low official mortgage rates are getting!
I wonder whats ahead?