January 24, 2009
Bank of England 8-1 Vote to Cut Interest Rates by 0.5%
The Bank of England Monetary Policy Committee (MPC) this month voted 8-1 in favour of reducing UK interest rates form 2% to 1.5%.
The cut earlier this month brought the base rate to its lowest level in the Bank’s 315-year history.
It also marked the fourth consecutive month that the base rate was reduced, in attempts to help the struggling economy.
One member of the MPC, David Blanchflower, wanted the base rate to be reduced by 1%.
Minutes from the January MPC meeting showed that the rate-setting body did consider leaving interest rates at 2% for another month because December’s cut had meant there was “substantial monetary stimulus already in the system”.
The argument against leaving the base rate unchanged at 2% was that “the markets had priced in a cut of 50 basis points [0.5%] and either leaving the base rate unchanged this month or implementing a larger-than-expected cut, could damage confidence in both financial markets and the real economy”.
How many more cuts can we expect in the future? Are we heading for 0% interest rates? What does this mean for Property Investors?
