Friday 11th April 2008
The Bank of Englands quarter-point reduction in the base rate this week could prove cold comfort for many Britons.
Capital Economics explains that, while the base rate is falling, the availability of credit to consumers is not on the increase.
UK economist at the firm Vicky Redwood says: "I do not think it will make a huge amount of difference because lenders have not passed previous cuts in interest rates on to borrowers.
"So it is likely that a cut this week will not be fully passed on either."
Ms Redwood adds that financial conditions for many Britons are apt to get worse before they begin to improve.
However, in the medium term she predicts that sharp cuts in the base rate remain probable to be made by the Banks monetary policy committee.
As a result of this, she contends that lower interest rates are eventually likely to feed through to the products available to consumers on the open market.
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