Sharp decrease in interest rates

There was a shock move today as the Bank of England cut interest rates by an unexpected 1.5%. Interest rates now stand at 3% and is an attempt by the government to try and help rebuild the economy. The cut comes after recent weak data about the economy was released. It is the first time since the Bank has cut rates by more than 0.5% since its independence in 1997. It is also the biggest cut since March 1987 when interest rates were cut by 2%.

There were concerns that the cut in interest rates would not be passed onto customers and this is something Gordon Brown wanted to address. Some banks have said that they would pass the full amount onto their customers whereas others have not yet commented on what they plan to do. It is also believed that the cut in interest rates will also help manufacturing companies who have been struggling in the past 7 months.