Last week’s move by the Bank of England to lower the base rate to one per cent was the right decision, it has been argued.
British Chambers of Commerce economic advisor David Kern said he supported the measure and noted that interest rates are now “near the bottom”.
He commented that lenders have begun to move more quickly to reduce mortgage rates in light of recent events, something that could help homeowners with their debt management.
“By and large the banks have been rather slow before October. Since October I think they have moved quite forcefully,” Mr Kern remarked.
Following the latest rate reduction, the Bank’s monetary policy committee may turn to alternative measures to help conditions in the economy, he predicted.
And he explained that the base rate will become less significant to the economy the lower it falls, saying: “Once you are at one per cent then it becomes less critical.”
However, Nationwide recently suggested that people’s desire to save has been impacted by low interest rates.
By Jamie Price