Economy tracker: Interest rates

Bank of England - Interest rates, 1694-2009

The Bank of England has decided to left interest rates unchanged at 0.5% since March 2009.

FALLING RATES

  • 8 October 2008: 4.5%
  • 6 November 2008: 3.0%
  • 4 December 2008: 2.0%
  • 8 January 2009: 1.5%
  • 5 February 2009: 1.0%
  • 5 March 2009: 0.5%

This period of stable rates follows a sharp downward trend that began during the second half of 2008 as the financial crisis broke.

Cutting interest rates is one of the main tools available to the Bank as it attempts to boost the UK's economy in the face of a serious global recession.

By March 2009 rates had finally hit such a low level that cutting them any further would have been ineffective.

Rates had been as high as 5.0% as recently as the first week of October 2008.

But when sharp cuts in the cost of borrowing did not lead to an increase in lending to businesses and individuals, other measures had to be considered to kick-start the economy.

The Bank carried out a £200bn programme of quantitative easing, which aimed to increase the amount of money in the UK's financial system in an attempt to boost bank lending. It halted this programme in February 2010.

The UK emerged from recession in the final quarter of 2009, when it grew by 0.4%.

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