4 Major British Banks Cut Base Interest Rate

Britain’s four major banks Wednesday slashed their key interest rates another half percentage point to 9% after the Bank of England signaled its desire to lower rates in the aftermath of the global stock collapse.

It was the second time in about two weeks that the nation’s major banks lowered their base lending rates, the benchmark for determining corporate and consumer loans. The rate was cut half a percentage point to 9.5% on Oct. 23.

The Bank of England was the first to announce that it was lowering its market dealing rate by three-eights of a percentage point to 9%. The money-market dealing rate is the rate that the central bank uses for loans to its member banks, similar to the discount rate in the United States.

Shortly after, Barclays Bank cut its base lending rate, effective Thursday, and Midland Bank, National Westminster Bank and Lloyds Bank followed suit.

The cuts came on a day in which share prices plummeted on the London Stock Exchange on concern about the apparent lack of progress in U.S. deficit-cutting talks and continued worries about potential losses among securities firms.

Meanwhile, Chancellor of the Exchequer (finance minister) Nigel Lawson said Wednesday that the world economy wasn’t “grinding to a halt,” but cautioned that U.S. efforts to cut the budget deficit were the key to restoring confidence in financial markets following last month’s market plunge.

Lower interest rates often help stimulate economic growth by making borrowing less expensive.