Bank slashes interest rate

Interest rates have been slashed in an unprecedented move by the Bank of England's monetary policy committee (MPC).

The MPC today announced that the official base rate has been dropped from 4.5 per cent to three per cent.

It is the biggest cut the body has made since being given rate-setting independence in 1997 and the figure is now at its lowest point in that time.

And it is also the largest cut since 1981, when the rate was slashed by two cent.

The decision could help businesses hoping to obtain finance, as it should reduce the cost of borrowing.

It goes beyond calls made by the Federation of Small Businesses (FSB), which stated earlier this week that a one per cent cut would be needed in order to allow small companies to survive the economic downturn.

FSB spokesman Stephen Adams explained that without more finance, companies would be forced to reduce staff.

Published on: November 6, 2008

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