The Bank of England today lowered interest rates to a 300 year low today to just 0.5%, but will this get the banks lending again or is the market just too fragile to see improvement?
The interest rate cut was widely expected, although savers pleaded with the bank to think of them when making their monthly decision on interest rates as they are suffering the effects of the low rate on their savings.
The BOE lowers interest rates in an attempt to improve liquidity in the market, but even as January mortgage approvals rose four percent on Decembers lending figures, it is still 43% lower than January 2008.
Let us hope the the signs are improving, last month Government owned Northern Rock began lending again, although as they are owned by the taxpayer, they are not allowed to offer rates more competitive with the market place.
Will this latest rate cut stimulate the market? Only if banks are willing to pass on the rate cut to their customers, and to begin loaning money to businesses and individuals will we see the situation improve we believe.
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