The Bank of England’s monetary policy committee (MPC) has cut the base rate by 1.5 percentage points, bringing it down to three per cent.
Announcing the move at midday today, the MPC explained that the decision to make a “significant reduction” in the rate was made due to the risk of the consumer prices index (CPI) dropping below the two per cent target set by the chancellor Alistair Darling.
“The past two months have seen a substantial downward shift in the prospects for inflation in the United Kingdom,” the MPC stated.
Those struggling with debt management – especially customers who are risking repossession by not meeting their mortgage payments – may welcome the move, as lenders could drop mortgage rates as a result and pass savings onto consumers.
The previous lowest base rate since the MPC was formed in May 1997 occurred between July and November 2003, when the figure was at 3.5 per cent.
By Tom Musk