Interest Rates and Monetary Policy: Data on interest rates from the UK, eurozone and the US; a summary of the Bank of England’s and international, quantitative easing policy.Jump to full report >>
Central banks around the world cut interest rates sharply during the financial crisis of 2007-2009. Rates have remained at historic lows since then, with key interest rates close to or below 0% in most developed economies.
The Bank of England’s Monetary Policy Committee (MPC) cut its main interest rate (the Base Rate) from 0.5% to 0.25% on 4 August 2016, the first change since March 2009, and the lowest since the Bank was founded in 1694. The MPC cited the weaker outlook for the economy following the vote to leave the EU as its main reason for cutting rates.
As well as the 1/4%–point cut to interest rates the MPC agreed a series of other measures designed to boost the economy:
The European Central Bank lowered its main interest rate for the Eurozone to 0.0% and the deposit rate to -0.4% in March 2016. The ECB is also conducting a QE programme, intended to stimulate the economy, whereby it buys €80bn worth of assets (mostly government bonds of Eurozone countries) a month.
The US Federal Reserve increased its main interest rate by 0.25%-points in December 2015 to a range of 0.25-0.5%. This is the first increase since 2006. It was left unchanged at its latest September meeting.
Commons Briefing papers SN02802
Authors: Daniel Harari; Anna Moses