ITRADER - <span>INVEST IN YOUR FUTURE</span>

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ITRADER - INVEST IN YOUR FUTURE
EURUSD1.07119:49 06.12.16
GBPUSD1.26619:49 06.12.16
EURCHF1.08219:49 06.12.16
USDJPY113.91519:49 06.12.16
AUDUSD0.74519:49 06.12.16
USDCAD1.32819:49 06.12.16
APPLE109.45519:49 06.12.16
GOLD1169.16519:49 06.12.16
EURUSD1.07119:49 06.12.16
GBPUSD1.26619:49 06.12.16
EURCHF1.08219:49 06.12.16
USDJPY113.91519:49 06.12.16
AUDUSD0.74519:49 06.12.16
USDCAD1.32819:49 06.12.16
APPLE109.45519:49 06.12.16
GOLD1169.16519:49 06.12.16

Prices are indicative

A Fast Look at UK Interest Rates

iTrader - UK interest rates, a fast look

The history of interest rates in the United Kingdom dates back to the leadership of William of Orange in the 16th century. Since then, these rates have fluctuated regularly as the crown, parliament and, now the Bank, have worked to use it as a tool to respond to the events of the day.

Initially, regulation prevented large changes in the rate to deter exorbitant lending. However, the modern rates have fluctuated dramatically as the bank has responded to financial crises, stock market crashes and war.

Since 1694, UK interest rates have been set by the Bank of England, which sets the official bank rate. This rate is the overnight rate at which money is lent between financial institutions in the UK. However, the official bank rate affects more than large institutions. It also has a trickle-down effect on the rates offered to consumers, both individuals and companies.

Impact of the Official Bank Rate on the UK Economy

UK interest rates are more than just lending rates. They are also intimately tied up with other important facets of the economy like inflation. In fact, the Bank will often use the interest rate as a tool to deal with inflation. If inflation grows too quickly, the interest rate will accompany it, thereby forcing consumers to pay more money on borrowing. Doing this leaves them with less money to spend elsewhere.

Similarly, if inflation dips below the bank’s expectations, the bank rate will dip to encourage more spending and prevent a build-up of excess cash.

The use of the interest rate to control the economy can be seen in the way it has moved since 1991. The 1990s began floating around 13% and dropped to 5% by 1994. The rates moved up and down for the next few years, generally staying over 6% until 2001 when they dropped to under 4%. They continued to hover between 4% and 6% until the market crash of 2008, when the rate was cut to 2% for the first time in several decades to encourage money movement.

In 2009, the Bank slashed the rate to 0.5%, the lowest rate in the history of the bank in an attempt to prevent the recession from transforming into a fully-fledged economic crisis.

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