Fraser’s already raised the most important question hovering over today’s rate cut: that is, what options are left once the rate-cutting route has been exhausted? But there’s another question in the air, touched on by Mike Smithson over at Political Betting: just how low can we go? We’re already at the lowest base rate in the Bank of England’s 315 year history, and bookies are offering odds on rates hitting 0 percent by the end of the year (20/1 according to the Ladbrokes press release that hit my inbox earlier).
Politically, I can’t see the downwards trajectory of interest rates doing much to help Gordon Brown. Of course, the cuts are intended to have more than one effect, but the fact remains that they’re just not having the dramatic impact on mortgage rates that both the Bank and the Government were hoping for. In turn, this leaves room for the Tories’ saver-friendly approach to become more and more electorally potent as the base rate approaches 0; even if Anatole Kaletsky isn’t
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