Bank of England Cuts Interest Rates
The Bank of England cut interest rates for the first time in more than two years on Thursday, by quarter percentage point to 5.5%.
The decision had been almost too close to call as the Bank’s key policymakers faced the dilemma of cutting rates to buoy the faltering economy and holding rates to keep inflation in check.
Michael Coogan, Director General of the Council of Mortgage Lenders, said: “A reduction in interest rates is exactly what the market needs and will benefit consumers.
“This will reduce the risk of payment shock for the 1.4 million borrowers coming off fixed rates in the next year.”
Halifax and Nationwide said they would pass the 0.25 percentage point reduction on to borrowers from Jan. 1, reducing their standard variable mortgage rates to 7.5 per cent and 6.99 per cent, respectively.
That put pressure on other lenders to follow suit, and First Direct later said it also would cut its rate to 6.5 per cent with immediate effect. Other banks said their rates were “under review.”
Economists are predicting two further interest rate cuts in February and May.