The Bank of England’s 0.25% interest rate cut earlier today will benefit the UK farming sector, according to one major high street bank.
Analysts had widely predicted the move, which saw the rate cut by 0.25% to 5.25%, after recent reductions in the US, where the Federal Reserve has slashed its borrowing costs from 4.25% to 3%.
Peter Sobey, head of agriculture at Lloyds TSB welcomed the move, highlighting that the cut was a welcome boost to farmers at the beginning of what will be a challenging year for many in the farming sector.
“During the last 12 months, farmers have experienced volatile financial conditions, producing both winners and losers. Those in cereals and dairy have profited from high prices of grain and milk, although suffered increasing costs of both fuel and fertiliser.
“This cut in interest rates, bringing down the cost of running businesses, will help relieve some of the pressures currently facing farmers. However, the combination of a cooling economy and high inflation risks, caused by factors such as increasing oil prices, could mean fewer interest rate cuts in the year ahead than previously expected, warned Mr Sobey.
“Our advice to farmers is to take advantage of the low fixed rates which are currently available, as they are likely to rise again in the future,” he said.