Interest rate reduced by 0.25 points
(08 February 2008)

The Bank of England (BOE) has reduced the base rate of interest by 0.25 points to 5.25 per cent, which is good news for most British people.

A cut in the interest rate is good news for anyone in debt in the UK, but is bad news for savers, said ITN News.

With the average person having £28,189 of debt in 2007, according to Credit Action, customers could see a real difference to their bills if the rate cut is passed on by the banks.

Alliance and Leicester, the Abbey and Halifax are among the banks which have already passed on the cut to their customers.

The BOE has said that tightening credit conditions for both businesses and consumers led to the decision.

A rise in energy and food prices was predicted by the organisation, which would lead to a raise in inflation.