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Why are UK base rates still going down?

As coverage of the latest UK base rate reduction continues to dominate the press there are many questions being asked regarding why the Bank of England continues along such a path when there is no benefit, or visible benefit, for the UK consumer. The latest base rate reduction was accompanied by suggestions that vast majority of the U.K.'s leading banks will not be reducing their mortgage rates with many using the excuse that savers are suffering - even though savers have been suffering for some time!

The reality is that the historic power afforded to a reduction in UK base rates diminished some time ago as the banking sector refused to pass on substantial savings to UK consumers. Many now believe that the ongoing reduction in UK base rates is simply a way in which UK banks can effectively expand their profit margins by not passing on cost savings to UK consumers. This comes at a time when the UK property sector is in freefall and even those looking to acquire property are struggling to finalise funding.

While many people expect UK base rates to fall to around 0% there is an argument that this will have little or no impact upon the UK economy with consumer confidence lower than ever before.

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