UK Cuts Interest Rates to 3%

by Jordan Yerman | November 6, 2008 at 09:05 am

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As the expectation of a long recession looms, the Bank of England has cut interest rates to 3%, down from 4.5%. This is the second emergency cut since the credit crunch crisis began.

However, this is a rate cut given to banks, and those banks are free to decide whether or not to pass it on to their respective customers.

The size of the cut - the most dramatic since 1981 - signals the Bank's concern the UK is heading for a long recession, the BBC's economics editor says.

And that's not all: a further rate cut has not been ruled out.

The Bank of England could follow today's shock 1.5 per cent cut in interest rates with a further half-point reduction next month, experts predicted today.

The interest rate cuts come as the IMF predicts that developed economies will contract for the whole of the coming year for the first time since World War Two.

Earlier coverage