I wonder if anyone can tell me, fairly simply, what significance Bank Rate really has?
I remember a time when mortgage and savings interest rates would follow it almost slavishly, and I'd always assumed that they had to for some reason. But that doesn't seem to be the case any more.
So, what is the point of the Bank of England setting one? How does it change anything?
I know what you mean... since LIBOR seems to rule everything these days. I think it sends a signal to the rest of the financial world ...it appears to be symbolism these days although I have no doubt if the banks had not followed the drop in bank rate Gord would have put pressure on them...especially now that he has preference shares in some of them! What should happen is that as banks build up trust once more between themselves then LIBOR will fall, since it is a rate built on the perceived risk in lending and then you will find everyone following slavishly as you describe the bank rate again as soon as it is higher than LIBOR.
Be warned - if you have crossed him in the past - this is Norman Wells' using his new posting name : ceres.
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