The Bank of England has today (5 February) cut interest rates by half a percent, from 1.5% to 1%, in a further attempt to help the struggling economy.
It is the fifth interest rate cut since October, when base rate was 5%, and means rates are the lowest in the Bank of England’s 315-year history.
Farmers, like other businesses and members of the public, will be keen to see banks pass on the rate cut as soon as possible.
Paul Spencer, agriculture director for AMC and Lloyds TSB Agriculture, said it would be passing on this latest base rate reduction in full to farming customers.
He said now was a good time for farmers to consider fixing interest rates as a way of reducing financial risk in the farm business. “If borrowed capital is a significant part of the farm business, taking advantage of current rates by fixing all or part of the borrowing can help to ensure that monthly finance commitments are more stable, and budgeting easier in the long-term.”
Mr Spencer advised farmers to consider the level of risk they are prepared to carry and the degree of importance they place on having their future interest payments fixed before making any decision. “If your finances show it is logical to fix, you must establish a range within which you are prepared to work, and catch the market at an appropriate time.”
Check out Phil Clarke’s Business Blog for more on the rate cut and tell us what you think.