Bank of England cuts base rate

The Bank of England`s Monetary Policy Committee today announced it would be cutting its base rate by another half-point to 0.5%.

The cut is a further attempt to encourage banks and other financial institutions to lend money to businesses and individuals, which could help to revive the economy and limit the effects of the recession.

However, a number of lenders announced last month that they would be unlikely to change their customers` interest rates in line with future base rate cuts, and a number of experts have said that base rate cuts are no longer enough to tackle the economic downturn - adding that savers would be likely to suffer.

A spokesperson for Debt Advisers Direct said: “It`s less likely than in previous months that we will see significant falls in rates on mortgages and loans - apart from tracker deals, which are automatically tied to the base rate.

“The concern for many people is that savings rates are likely to fall, meaning those who rely on savings interest to supplement their income could lose out.

“However, we still advise that savings should be an important part of people`s finances. After all, any amount of savings offers better protection against falling into debt than no savings at all.”

Source

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