MPC cuts interest rate to 4.5 per cent

The Bank of England’s Monetary Policy Committee has decided to reduce the official bank rate today after growing pressure to act in stabilising the economy rather than worrying about short term inflation.

The move will help five million homeowners struggling with mortgage payments. Managing director of estate agent Marsh & Parsons, Peter Rollings commented that “this is the decisive action we’ve all been clamouring for.  Together with the liquidity measures announced this morning, there is some light at the end of the tunnel for borrowers.  A half percentage point cut in the base rate should allow lenders to lower their pricing on a lot of their products – and for those on tracker rates, the pain relief should be almost immediate.  They could be saving over £60 a month on a typical interest only £150,000 mortgage, and just under £50 a month off a repayment mortgage.”

The Bank of England made the change after similar cuts were made across the world by authorities such as the American Federal Reserve and the European Central Bank. However, stock markets have reacted explosively as they adjust to the news of the interest rate cut, with sharp rises being swiftly followed by steep drops.