Bank announces early rate cut

Posted: 09 Oct 2008 12:55:16 GMT

The Bank of England's monetary policy committee (MPC) this week announced a massive 0.5 per cent cut to interest rates, a day ahead of schedule.

At a special meeting on Wednesday October 8th, the committee voted to reduce the rate to 4.5 per cent, as part of a co-ordinated move with several other countries to tackle the current economic crisis.

In good news for homeowners in the UK and across the world, the Bank of England, Bank of Canada, European Central Bank, US Federal Reserve, Sveriges Riksbank, Swiss National Bank and Bank of Japan all announced cuts.

They said in a joint statement: "Inflation expectations are diminishing and remain anchored to price stability.

"The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability. Some easing of global monetary conditions is therefore warranted."

Although experts claim that mortgage rates are primarily influenced by international Swap rates - the fee that bank's pay for borrowing money from other banks - such co-ordinated action across Europe, the US and Asia is likely to alleviate pressure on home buyers.

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