European Central Bank Cuts Interest Rate To 0.5 Per Cent

The European Central Bank (ECB) has announced it was lowering the central bank lending rate to 0.5%. The 0.25% reduction is the first interest rate cut for 10 months in a bid to stimulate the stressed Southern members of the Eurozone. The Eurozone has continued to suffer from recession and rising unemployment, particularly in Spain, Greece, Portugal and Cyprus.

Funding for Lending Scheme Extended for SMEs

The Bank of England announced that it would extend its Funding For Lending Scheme to January 2015. The £80 billion Funding for Lending Scheme is designed to boost lending to businesses and households by offering incentives to banks to increase the amount they lend. The new proposal will place greater emphasis on lending towards small and medium sized enterprises (SMEs) as the UK government continues its drive to promote growth in the UK economy.

The move is a welcome one for small businesses. Well run companies will have access to cheaper funds for another year. For more information please see our guest article on the Funding For Lending Scheme by NatWest bank.

http://belsizeaccountancy.co.uk/natwest/

S&P 500 Index Hits New High

S&P 500 index hits a new record high on Thursday reaching $1,596 on Thursday. This follows the recent announcement that the Bank of Japan is planning a huge increase in monetary easing to tackle deflation. The significant monetary easing by the World’s major central banks continues to filter into the system as can be seen by the rise in equities in 2013. The stock market appears oblivious to the Eurozone banking crisis and the frightening developments in Cyprus.  Market confidence appears to be picking up despite the ongoing recession and prospect of rising inflation as the impact of this monetary experiment unfolds.