What happens if BoE cuts rates to zero?

Weaker economy Lucy O’Carroll, chief economist – global strategy, SWIP   The short answer is not much. This reflects the exceptionally low level of bank rate, which has been 0.5% since March 2009. With interest rates already so low, a further cut in bank rate may have little effect. Indeed, the Bank has argued that it could be counterproductive. As some financial institutions are contractually obliged to pass on cuts in bank rate to borrowers, while deposit rates are already very low, the squeeze on the financial sector’s profits could reduce its lending capacity and weaken econom...