Now that’s a cut

So, those pushing for a 1 percent cut in interest rates have got their wish – and then some.  The Bank has just announced a 1.5 percent cut in base rates, bringing them down to 3 percent.  That’s the biggest cut since 1981.

Now what does this – frankly, quite astonishing – move tell us? Two things, in particular: 1) That the Bank feels that the doomsayers – the people like David Blanchflower, with their “cut rates or die” prognoses – are most probably right.  Things are worse than the Bank initially thought, and they’re trying to play catch-up. And, 2) that the officials really, really want significant cuts to be passed on by banks to their customers. HBOS et al will find it hard to ignore this one – but should feel rightly aggrieved if Northern Rock doesn’t do similar.

This financial crisis has a habit of throwing up surprises. This cut’s another one for the list.