12 Jan 2009

Bank of England slashes rates to all-time low

6:10 pm on 12 January 2009

The Bank of England cut interest rates to 1.5% on Thursday, the lowest level in its 315-year history, as it continues efforts to aid an economic recovery.

The half percentage point reduction brings interest rates below 2% for the first time since the Bank of England was founded in 1694.

But the move is being criticised by the British Manufacturers' association, which calls the move "too timid".

The association says the central bank should have cut rates further.

The Bank of England has now reduced rates four times from October's 5% level.

Britain's top share index ended down 0.1%, as the expected rate cut kept investors cautious. The FTSE 100 closed at 4505.37 points, down 2.14 points.

Most mortgage customers with tracker deals will automatically have the cut in interest rates passed on to them by their bank or building society, the BBC reports.

Customers with an average £150,000 mortgage will save £46 a month. Those with a £250,000 mortgage will save £76 a month.

But those on standard variable-rate deals must wait for a decision from their lender.

While Lloyds TSB, HSBC and Nationwide have already said they will pass on the reduction, most of the other lenders are currently saying their rates are under review.