13:53 31 July 2012
The Bank of England’s base interest rate is expected to drop to 0.25 per cent this week. If this happens, it will be the lowest rate in the bank’s 318-year history. These findings were revealed by City analysts last June 27.
The forecast came after the Bank’s Monetary Policy Committee faced pressure to give the economy a boost after it has been revealed last week that Britain’s worst double-dip recession in 50 years has officially began.
The bank’s actions – and the resulting fall of the interest rates – are expected to provide a boost of up to £600 million for homeowners.
Economists, however, are concerned on how this will affect the returns that savers will earn and how many families might simply use these returns to pay off their debts in the face of the global economic chaos. The decrease also brings Britain savers yet another step closer to zero-interest savings accounts.
The plan to reduce the interest rates has been around for some time, but the Bank initially planned to wait until autumn before finalizing their decision. However, after the major decline in the gross domestic product between April and June, the Bank faced heightened pressure to take action, thus their earlier announcement.
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