Posted by Katherine

Today the Monetary Policy Committee at the Bank of England announced that interest rates have been cut to 2%.

The Bank of England announced interest rates have been cut to 2% today – the lowest seen since 1951 and the lowest level since the bank was founded.

Despite last month’s cut of two and a half percentage points, economic gloom has failed to be lifted. In fact, all economic data suggests that the recession will be prolonged and far-reaching.

Rising unemployment has caused consumer confidence to sink to its lowest ever levels, and repeated profit warnings and write-offs do nothing for business confidence.

Most economists expect a one point cut to 2%, the third cut in as many months. Such a cut would mark the steepest rate of decline in UK interest rate history, from the 5% prevailing in the summer and would match levels last seen in 1951.

However, the overnight swap index market was trading at levels suggesting an even bigger 1.5 point cut, matching that of last month and taking rates to never-before plumbed levels.

And so severe is the recessionary storm gripping the global economy, interest rates across the industrialised world are marching down to zero, according to MSN Money's investing expert Nick Louth.

How much do interest rates need to be cut to restore confidence? Have your say here.

Share It

del.icio.us	Digg	Facebook	Google
Live Spaces	MySpace	Newsvine	Reddit
StumbleUpon	Technorati	Twitter	Yahoo! My Web

Technorati Tags: Interest rates,cost of borrowing,MPC,Bank of England