Sharing by Rahul Sharma from Manchester UK,
The Bank of England has cut the base
rate from 0.75% to 0.25% in an emergency response to the "economic
shock" of the coronavirus outbreak.
The base rate is the Bank of England's
official borrowing rate – ie, what it charges other banks and lenders when
they borrow money – and it influences what borrowers pay and savers earn.
The surprise rate-cut decision was taken at a
special meeting of the Bank's Monetary Policy Committee on Tuesday. The Bank
said the cut was a response to the "economic shock" of
coronavirus and would "help to support business and consumer confidence at
a difficult time, to bolster the cash flows of businesses and households, and
to reduce the cost, and to improve the availability, of finance".
The base rate was last cut in 2016, when it
fell from 0.5% to 0.25%. It's risen twice since to reach 0.75%. But interest
rates have generally been at historic lows since the 2008 financial
crash.
Here are the need-to-knows for your
finances:
· Some mortgages will get cheaper. Homes with tracker mortgages – whose
rates 'track' the base rate – should see their rates drop. However, fixes won't
change and with others it's not clear-cut. See our mortgages
analysis.
· It's
more bad news for savers. Savings
rates have been woeful for years and are now likely to fall further, although
if you've a fixed-rate account you're protected for the time being. See
our savings
analysis.
We'll be updating this story throughout today with more analysis
and what banks and lenders are doing in response to the rate cut. And for full
and constantly updated info on travel insurance, holiday bookings and more
during the coronavirus outbreak, see our Covid-19
Coronavirus Help guide.
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