Bank 'was right' to cut rates further

Date: 9th February 2009

The Bank of England was correct in its decision to cut interest rates to one per cent, it has been claimed.

Head of the British Chambers of Commerce, David Kern, believes that recent base reductions have forced the hand of banks to pass on lower lending rate to businesses and individuals.

Despite this, he admitted that there was little scope for further cuts to the Bank rate.

Mr Kern commented: "By and large the banks have been rather slow before October. Since October I think they have moved quite forcefully.

"The importance of interest rates is now less than it was, because now they are so low."

He concluded by suggesting interest rates would not go much lower and other policies would be considered for quantitative easing.

Last week, the financial website Fool.co.uk suggested that the government should cut taxation, rather than let the Bank continually cut interest rates.