Bank of England slashes rate to 3%

Date: 6th November 2008

The Bank of England has made the shock decision to cut its lending rate by 150 basis points to three per cent.

Representing the lowest base rate since 1955, the monetary policy committee's (MPC) decision is most likely intended to encourage lending to individuals and businesses.

While the news will no doubt be welcomed by the business start-up sector, there have been concerns that banks will not pass the rate on; anxieties which prime minister Gordon Brown has been keen to address.

Mr Brown commented in a parliamentary session: "We want the banks and building societies to pass on the interest rate cuts to their mortgage holders.

"What we've been trying to do over the last few weeks is get the liquidity into the system, recapitalise our banks and then get them to resume the lending that is necessary."

Last month, the MPC cut the base rate by half a percentage point in a co-ordinated strategy with several other central banks.