Interest rates have been cut to their lowest level in the Bank of England’s 315 year history.
The cut, which was widely predicted by economists, brings down the bank’s base rate to 0.5% and is a further attempt to inject some life into the moribund economy.
The bank will also begin a process known as quantitative easing, where it will buy assets – such as government securities (gilts) and corporate bonds, enabling it to release more money into the system.
As it will not borrow to fund the purchases though, it is creating new money and not simply printing new money as has been reported elsewhere.
Bad news for savers
Although the cut is good news for people with mortgages, those with savings have less to cheer.
Angry savers staged a protest outside the bank this morning to draw attention to the fact that they’re being adversely affected by the continued cuts.
This week’s Which? Best Buy savings account is only 3.5%, down from a high of 6.55% last year.
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