Surprise interest rate cut gives a lift to homeowners and firms
THE Bank of England dramatically produced an emergency interest rate cut early yesterday of half a percentage point to 0.25 per cent – giving mortgage holders and businesses a huge boost.
The move, the first reduction on Budget Day since 1997, was triggered by turmoil in stock markets and fears coronavirus concerns could tip the global economy into recession. sion.
It takes borrowing g costs back down to 2016/ 17 levels – the lowest in our history.
The Monetary Policy Committee’s measures also included a scheme to spur banks to lend up to £ 100billion to small businesses.
And a decision to lower the amount banks have to hold as a “buffer” could bolster their lending power by an extra £ 190billion. n. Lloyds and Barclays s immediately lowered mortgage payments on variable- rate deals from next month. Mike Cherry, Cher chairman cha n of the th Federation ti of Small Businesses, said: “The Bank of England E has thankfully t wasted no time taking action act to try to stabilise stabil the UK economy. economy
“Four in ten small firms say new credit is unaffordable, so it is encouraging to see measures aimed at making loans less expensive.” But Stephen Jones, from banking lobby group UK Finance, s said: “A rate cut will a affect consumers and businesses in different ways d depending on the lending and savings s products they t hold.
“The majority of mortgage mo borrowers will not be impacted by today’s toda rate cut, as they are on fixed mortgages.” The rate reduction is the latest blow for savers.
Yet bank governor Mark Carney said the measures would help the UK through an economic shock that “could prove large and sharp but should be temporary”.
The cut is the first since August 2016 and the first unplanned decision since 2008.