UK interest rates slashed 1.5% to 3%
The Bank of England’s Monetary Policy Committee has opted to slash rates from 4.5% to 3%.
Many analysts believed that a half percentage point cut was on the cards but the Bank has opted for an aggressive cut after it has been under severe pressure to cut interest rates to avoid a prolonged recession.
Figures yesterday revealed that the service sector shrank in October. The service sector, which makes for almost three quarters of output, fell for the sixth consecutive month and was at its lowest level since 1996, according to an index compiled by the Chartered Institute of Purchase and Supply.
Last month, in a co-ordinated move with other banks, the Bank cut UK interest rates from 5% to 4.5%.
Central banks in the US, Japan and China have all cut interest rates in the last week in a bid to fight off a recession.
The news comes as the Halifax revealed today that house prices fell 2.2% in October, taking the annual rate of fall down to around 15%.
However, while a rate cut should be good news for homeowners, some lenders are yet to pass on the rate cut to borrowers.
Financial information provider, Moneyfacts.co.uk, recently reported that half of the UK’s mortgage lenders had failed to cut their standard variable rates (SVR) in line with the recent interest rate cut.
As a result, a group of more than 20 MPs have tabled a motion in parliament calling for all UK banks to pass on the benefits to customers.
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