The Bank of England today announced that interest rates are to
fall to their lowest ever level – 1.5 per cent.
“At its January meeting, the [Monetary Policy] Committee noted
that the recent easing in monetary and fiscal policy, the
substantial fall in sterling and the prospective decline in
inflation would together provide a considerable stimulus to
activity as the year progressed.
Nevertheless, the Committee judged that […] there remained a
significant risk of undershooting the 2% CPI inflation target in
the medium term at the existing level of Bank Rate. Accordingly,
the Committee concluded that a further reduction in Bank Rate of
0.5 percentage points to 1.5 per cent was necessary to meet
the target in the medium term,” the Bank said.
Director of the RMIF’s National Franchised Dealers Association,
Sue Robinson said: “The Government’s reliance on interest rate
reductions to stimulate the economy should be part of a wider
package of measures, and we urge that more direct approaches are
used as soon as possible.
“Although interest rate reductions will help borrowers, it will
conversely penalize savers, and those people reliant on interest
for their disposable income. Unless counterbalanced with tax cuts
and business support measures, further interest rate reductions
could have a negligible effect on the economy.”