Interest rates have been cut to a mere 2%, the lowest rate in 57 years. Lower interest rates means of course, lower credit card bills and lower mortgage repayments. When interest rates are low there is also less incentive to save, meaning people will be more inclined to spend, especially with the cut in VAT. This is in keeping with the government’s policy of financial stimulus which aims to lessen the impact of recession by encouraging people to keep spending.
For those people wishing to save, Martin Lewis from Money Saving Expert has some advice, ‘there’s an urgent window of opportunity to fix savings at the pre-rate cut levels’. Now is the time to set up a savings account before the interest rates tumble.
