UK interest rates cut to record low
The Bank of England (BoE) has cut UK interest rates from 0.5% to 0.25% – the lowest level in the Bank’s 322-year history.
All nine members of the BoE’s Monetary Policy Committee (MPC) unanimously backed the cut, which is the first since 2009.
Upon the news, the pound fell sharply against the euro and the dollar.
The decision to reduce interest rates came in response to fears that the UK could be slipping into recession following the recent vote to leave the EU.
Mark Carney, Governor of the BoE, vowed to take ‘whatever action is necessary’ to achieve financial stability, commenting: ‘By acting early and comprehensively, the MPC can reduce uncertainty, bolster confidence, blunt the slowdown and support the necessary adjustments in the UK economy.’
Mr Carney also indicated that interest rates could be cut even further if the economy worsens.
Business groups have given their reactions in the wake of the decision to cut the base rate.
Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), commented: ‘With interest rates once again at record lows, expansionary fiscal policy can do more to shore up business and consumer confidence, and put the UK on a stronger growth path for the future.’
Meanwhile, Dr Adam Marshall, Acting Director General of the British Chambers of Commerce (BCC), stated: ‘The BoE’s unsurprising decision to cut interest rates reflects an increasingly uncertain outlook for the UK economy as the new Government begins to look at our changing relationship with the EU.
‘What businesses want is low, stable interest rates for the foreseeable future, which will enable them to make their own growth and expansion plans with confidence.’