Bank of England: Slashes Interest Rate to 3 percent

The Bank of England Monetary Policy Committee announced moments ago that they will cut the base interest rate by 1.5 percent which means it is now at 3 percent. But the question on everyone’s lips, will the big banks like HSBC, Barclays, Lloyds TSB and Royal Bank of Scotland pass on the rate to their customers.

Leaders of Business urged for an interest cut of at least 1 percent to avoid Britain’s economy getting any worse by slipping into recession. But with the figures out today showing that UK house prices have tumbled by 15 percent last year making it more prominent that Britain was heading for a prolonged recession. The Bank of England slashed the interest rate by 1.5 percent which was a bigger cut than most expected.

The British Government have demanded that the banks pass on the interest rate cut in full to small businesses after they bailed the banks out with £37 billion of tax payers money. However, mortgage lenders have said that they are unlikely to pass the full rate cut to borrowers due to the Libor rate which is the rate the banks lend to each other remaining persistently high.

Source: Skynews