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LIBOR rate falls to 4.49%

The vital LIBOR rate has fallen 1.1 percentage points to 4.49% since the Bank of England reduced interest rates which has breathed new life into the money markets. Even though the fall of 1.1% is less than the 1.5% reduction in interest rates this is very much welcomed by the financial community which has seen borrowing costs increase massively over the last 12 months. However, some experts are suggesting that the Bank of England and European Central Bank interest rate policy needs to be complemented by additional assistance for the economy.

The reduction in the LIBOR rate should allow the mortgage companies to reduce their rates substantially if as promised they will be reflecting interest rate movements in the short to medium term. The reduction in the LIBOR has the potential to create a domino affect in financial markets whereby finance to business should be increased in the short to medium term. However, the government appears to have a real battle on its hands with the banks and mortgage companies not keen to pass on last week's rate reductions immediately.

The quicker additional finance can be pumped into the property and business markets, the sooner we should see an increase in economic activity.

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