Lowest Interest Rates Ever!

Today, the Bank of England cut interest rates to 2%, the joint lowest level ever.

The cut in rates, mirrored interest rate cuts around the world. Importantly, for the prospects of Sterling, the ECB is expected to cut rates by 50 basis points to 2.75% soon.

The rate cut will be a further boost for people with mortgage and loan repayments.

Spare a thought for savers who have one of the highest negative interest rates for a long time. Inflation CPI = 4.7% interest rates = 2%  Therefore real interest rate = -2.7 % (however banks are still keen to attract savers so many saving accounts offer rates above the base rate.

The magnitude of the rate cuts reflects the growing stagnation in the global economy. It is also a reflection that interest rate cuts are not being particularly effective. One reason is low confidence, another is the fact banks are reluctant to pass the full rate cut onto consumers.

(state of UK Economy)

One thought on “Lowest Interest Rates Ever!

  1. In November 2008, Bank Negara Malaysia (Central Bank of Malaysia) has cuts its Overnight Policy Rate (OPR) by 25 basis points to 3.25% from 3.50%. As result of that, many local banks on average have cut their BLR by 25 basic points to 6.50% from 6.75%, previously. These actions would promote Malaysian economic growth which technically is in recession.

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