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Bank of England lowers UK interest rate to 0.5%

Bank of England lowers UK interest rate to 0.5%

5th March 2009

As expected the Bank of England has slashed UK interests rates in half from 1% to 0.5% in another bid to kick start the economy. This is the sixth time since October last year that the rate has been cut as a result of the banking crisis that started in September.
Whilst the majority of homeowners will benefit from yet another rate cut, today's news comes as a slap in the face to savers who will see their interest payments fall even further. Retired business owner James Colbert says "We've worked hard to get our savings where they are today and we rely on the interest payment to live, we are being punished for being sensible with our money and saving. The reason for this recession is bad debt and irresponsible lending from the banks."

Many people will be overjoyed with today's news, bringing down their monthly mortgage payments even further providing the banks pass on the cut. However after February's rate cut only 41% of lenders passed on any reduction and only 14% passed on the full 0.5% cut. The real winners of these interest rate cuts are the mortgage borrowers with tracker deals that are set below base rate and are paying virtually no interest at all.

Many business groups have condemned recent interest cuts arguing they have done nothing to encourage banks to lend.

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