Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
6 November 2008
13:248718#1
By 1.5% to 3%.
This exceeds expectations and what was called for by business leaders, some might think it smacks of a panic measure.
I believe that this is the right thing to do but we are yet to see what the impact will be on consumers and what effect it will have on LIBOR rates.
I would guess that the stock market will respond well and retume to its upward trend of last week and reversing the falls of yesterday and so far today. It has to be good for Corporate Bonds investors but we will have to wait to see about that as previous falls have had limited or no impact, defying normal expectations.
Here, for information, is the response from the CBI, who have been very quick off the mark: (taken from Politicshome.com)
Richard Lambert, CBI Director-General
Daily Politics, BBC 2
Mr Lambert responded to the Bank of England's 1.5% cut in interest rates, describing the move as "historic".
"The Monetary Policy Committee has never done more than half a point, this is a historic moment, but we're living in historic financial times," he said.
He added that the cut was likely to improve consumer conditions.
"They are intending to use this cut to jolt the credit markets and I think some of this will pass through to customers and we will start to feel some benefit in the future.
"But the economy is in recession and it will get worse before it gets better."
But he said Gordon Brown was wrong to say that Britain was 'well-placed' to weather the financial storm.
"The government has mismanaged fiscal policy and put all the pressure on the Bank of England to unfreeze the credit markets through monetary policy," he said.
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Guest 640- Registered: 21 Apr 2007
- Posts: 7,819
6 November 2008
16:358732#2
Yes I heard this move today on the news described as historic, many were shocked at the rather large drop. The fear is though that Banks wont pass the drop in rates onto their customers but will use it to shore up their diminished profits. The governments idea is to get cheaper money back into circulation as small businesses cant get loans for expansion and/or for survival. If the banks play their part it should work.
