BOE Rate Cuts Have Had Muted Impact on Cost of New Loans

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BOE Rate Cuts Have Had Muted Impact on Cost of New Loans

(Bloomberg) -- With the debate around negative interest rates in the U.K. hotting up, it’s notable that the latest Bank of England data suggest that lowering the policy rate to 0.1% in March from 0.75% has had only a muted impact on the cost of new loans. If the central bank does take the historic step of pushing rates below zero, it will want to ensure the cut is passed on to households and companies. To do that, it would likely offer extremely cheap funding to lenders, making its Term Funding Scheme more generous, according to Bloomberg Economics.

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