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Bank cuts rate by 1%

The Bank of England’s Monetary Policy Committee has cut the Bank base rate by another 1 per cent to 2 per cent.

This drop sees the base rate fall to 2 per cent, its lowest rate since 1951, which highlights the state of the ailing economy.

Last month the Bank cut rates by 1.5 per cent, which led to widespread demand for a reduction in mortgage rates.

Although mortgage borrowers will benefit from the cut, savers are set to be hit as their rates follow the drop.

Jones Lang LaSalle head of EMEA research Paul Guest says: “This interest rate cut was necessary despite the 150 reduction just a month ago. Investor and occupier confidence are crumbling and the wholesale money market continues to be very restricted.”

Marsh & Parsons estate agents managing director Peter Rollings says: “This is a kneejerk reaction from the authorities – it doesn’t matter how low interest rates go if banks continue to hoard their cash.

“I don’t want to seem ungrateful, but interest rates mean very little compared to the amount of money in the mortgage markets – this is the lynch pin for the property industry. Without movement in the housing market, the whole economy suffers.”


Banks to follow RBS repo move

Royal Bank of Scotland says it will wait at least six months before it takes repossession action against borrowers with mortgage arrears and other banks look likely to follow suit.

Numbers racket

As part of a cost review, I am changing my firm’s telephone contract so that calls to 01 and 02 numbers are capped at a maximum charge of 10p for up to one hour.

2009 Forecast to be the year of income

BNY Mellon Asset Management head of distribution Paul Feeney believes the UK fund industry may contract by 20 per cent in the credit crunch and that 2009 will be the year of income.

Pbr can change the fund landscape

While it may not have been as attention-grabbing as headline cuts in VAT, the Government did make a number of tax concessions and planned changes on funds in last week’s pre-Budget report. And these changes may just help intermediaries in terms of choice for clients as well as in their tax planning.


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