Shock 0.5% rate cut by Bank of England
08 October 2008
An announcement on interest rates in the UK had not been expected until Thursday, but in a coordinated move six central banks have cut their rates by 0.5%.
Here in Britain the cut will see rates fall from 5% to 4.5%. The US Federal Reserve, the European Central Bank and the Central banks of Switzerland, Canada and Sweden have taken similar action.
This combined action is unprecedented and comes after the UK announced a radical £50 billion rescue plan for the country’s eight biggest banks and building societies.
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A joint statement from the Central banks says “The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability. Some easing of global monetary conditions is therefore warranted."
The Government’s banking rescue plan has so far received a lukewarm response on the stock market, but Chancellor Alistair Darling says the measures are “absolutely critical” to steer the UK through these “extraordinary times”.
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