Corbis/Cadmium
As the UK economy entered recession in autumn 2008, the Bank of England pushed UK interest rates down to 0.5% — the lowest in the bank’s history (see Figure 1). The rate change was designed to extricate the country from a deep recession and has created a unique environment for businesses and consumers.
The Bank of England’s Monetary Policy Committee (the MPC) sets the base rate each month at what it judges will enable achievement of the country’s inflation target. The base rate feeds through to determine the interest rates, which banks pay to depositors and charge to borrowers.
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