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| Bank cuts UK rates to 57-year low | Bank cuts UK rates to 57-year low |
| (10 minutes later) | |
| The Bank of England has cut interest rates by one percentage point, from 3% to 2% - the lowest level since 1951. | The Bank of England has cut interest rates by one percentage point, from 3% to 2% - the lowest level since 1951. |
| The move, which followed a dramatic cut in November, has been welcomed by many commentators who said the cut would help the slowing economy. | The move, which followed a dramatic cut in November, has been welcomed by many commentators who said the cut would help the slowing economy. |
| Hetal Mehta, of the Ernst & Young Item Club, said the cut was the "right medicine at the right time". | Hetal Mehta, of the Ernst & Young Item Club, said the cut was the "right medicine at the right time". |
| The CBI said it was "critical" that banks now passed on the reduction to businesses and other customers. | The CBI said it was "critical" that banks now passed on the reduction to businesses and other customers. |
| 'Rapid decline' | 'Rapid decline' |
| While banks are expected to cut the interest they pay on their savings accounts, but no decisions have yet been made. | While banks are expected to cut the interest they pay on their savings accounts, but no decisions have yet been made. |
| The Royal Bank of Scotland said it would be passing on the cut in full to its small business customers , while Lloyds TSB said it would be passing on the rate cut to its small business and mortgage customers. | The Royal Bank of Scotland said it would be passing on the cut in full to its small business customers , while Lloyds TSB said it would be passing on the rate cut to its small business and mortgage customers. |
| Before the interest rates decision, the Halifax said its customers with existing tracker mortgages, that follow moves in the Bank of England's Base Rate, would benefit in full from any cuts. | Before the interest rates decision, the Halifax said its customers with existing tracker mortgages, that follow moves in the Bank of England's Base Rate, would benefit in full from any cuts. |
| This was despite a clause in the Halifax's paperwork which would have allowed it to put a limit on the cuts it passed on to mortgage customers. | This was despite a clause in the Halifax's paperwork which would have allowed it to put a limit on the cuts it passed on to mortgage customers. |
| Commenting on the reaction to the Bank's latest interest rates cut, BBC economics editor Hugh Pym said: "There wasn't quite the shock value of the dramatic one-and-a-half point reduction in November. | Commenting on the reaction to the Bank's latest interest rates cut, BBC economics editor Hugh Pym said: "There wasn't quite the shock value of the dramatic one-and-a-half point reduction in November. |
| Rate of interest slashed again | Rate of interest slashed again |
| "But we shouldn't forget the scale of the Bank of England's action. The cost of borrowing has been more than halved since early October, as the Bank got to grips with the rapid decline in confidence and spending." | "But we shouldn't forget the scale of the Bank of England's action. The cost of borrowing has been more than halved since early October, as the Bank got to grips with the rapid decline in confidence and spending." |
| Earlier, there was further evidence of the rapidly slowing economy. | Earlier, there was further evidence of the rapidly slowing economy. |
| House prices fell 2.6% in November - their sharpest monthly drop since the housing market crash of the 1990s, according to the Halifax. | House prices fell 2.6% in November - their sharpest monthly drop since the housing market crash of the 1990s, according to the Halifax. |
| According to its latest survey, that increased the annual rate of house price falls to 14.9%. | According to its latest survey, that increased the annual rate of house price falls to 14.9%. |
| The Halifax, which is the UK's biggest mortgage lender, said the average property in the UK was now valued at £163,605, nearly £31,500 lower than 12 months ago. | The Halifax, which is the UK's biggest mortgage lender, said the average property in the UK was now valued at £163,605, nearly £31,500 lower than 12 months ago. |
| 'Stalling economy' | 'Stalling economy' |
| New car sales in November fell 36.8% on the year before - the steepest decline in nearly three decades according to the Society of Motor Manufacturers and Traders (SMMT). | New car sales in November fell 36.8% on the year before - the steepest decline in nearly three decades according to the Society of Motor Manufacturers and Traders (SMMT). |
| The SMMT said the decline was most pronounced in the market for private cars, with registrations down 45.1% in November. | The SMMT said the decline was most pronounced in the market for private cars, with registrations down 45.1% in November. |
| Elsewhere, the homewares retail chain The Pier - which has 31 stores and 17 concessions across the UK - became the latest victim of the economic turmoil and was placed in administration. It employs about 400 workers. class="lp" href="http://news.bbc.co.uk/1/hi/talking_point/default.stm">HAVE YOUR SAYBrilliant, once again the sensible savers get kicked in the teeth Jason Jones, Birmingham class="" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5748&edition=1&ttl=20081204124344">Send us your comments | |
| This latest dramatic cut by the Bank of England means that its Bank Rate is now at its lowest since November 1951. | This latest dramatic cut by the Bank of England means that its Bank Rate is now at its lowest since November 1951. |
| Hetal Mehta of the Ernst & Young Item Club said: "You could almost hear the sigh of relief up and down the country. Anything less would have been a missed opportunity. The Bank has given the economy the right medicine at the right time. | Hetal Mehta of the Ernst & Young Item Club said: "You could almost hear the sigh of relief up and down the country. Anything less would have been a missed opportunity. The Bank has given the economy the right medicine at the right time. |
| "Manufacturing and services surveys this week have confirmed that the recession is gathering momentum. At the same time, commodity prices have collapsed and inflation is set to fall dramatically, the dire prospect of deflation is becoming more likely." | "Manufacturing and services surveys this week have confirmed that the recession is gathering momentum. At the same time, commodity prices have collapsed and inflation is set to fall dramatically, the dire prospect of deflation is becoming more likely." |
| 'Counter-measures' | 'Counter-measures' |
| Graeme Leach of the Institute of Directors welcomed the Bank's decision, calling it "bold but necessary". | Graeme Leach of the Institute of Directors welcomed the Bank's decision, calling it "bold but necessary". |
| Ian McCafferty of the Confederation of British Industry said: "What is critical for business and consumers alike is that this reduction is passed on. | Ian McCafferty of the Confederation of British Industry said: "What is critical for business and consumers alike is that this reduction is passed on. |
| "The economy is stalling, inflation is expected to undershoot the Bank's own target and the headline rate of inflation is likely to turn negative for at least a few months in 2010," he said. | "The economy is stalling, inflation is expected to undershoot the Bank's own target and the headline rate of inflation is likely to turn negative for at least a few months in 2010," he said. |
| The CBI said it wanted to see lending by banks improve, to keep businesses working. | The CBI said it wanted to see lending by banks improve, to keep businesses working. |
| The British Chambers of Commerce (BCC) said that because of worrying signs that UK activity was falling sharply, it was "critically important" the the Bank to persevere with "aggressive" rate cuts. | The British Chambers of Commerce (BCC) said that because of worrying signs that UK activity was falling sharply, it was "critically important" the the Bank to persevere with "aggressive" rate cuts. |
| "There is a clear danger that unemployment will increase even more dramatically without urgent counter-measures," said David Kern, of the BCC. | "There is a clear danger that unemployment will increase even more dramatically without urgent counter-measures," said David Kern, of the BCC. |
| And he strongly urged the Bank of England's monetary policy committee to cut interest rates by at least a further half a percentage point at its January meeting. | And he strongly urged the Bank of England's monetary policy committee to cut interest rates by at least a further half a percentage point at its January meeting. |
| Stephen Robertson of the British Retail Consortium said: "This is exactly the type of decisive action we need during these uncertain times. With the threat of inflation fading, the Bank of England is right to concentrate on jump-starting the economy." | Stephen Robertson of the British Retail Consortium said: "This is exactly the type of decisive action we need during these uncertain times. With the threat of inflation fading, the Bank of England is right to concentrate on jump-starting the economy." |