THE latest round of interest rate cuts has been met with cautious optimism.

Business leaders in Essex have welcomed the move by the Bank of England yesterday to cut rates to 0.5 per cent.

But they fear the move could hit savers hard and will work only if banks pass the cuts on.

Interest rates have now been reduced six times since October and the Bank of England hopes to boost lending by expanding the amount of money in the economy by £75billion, though a policy called quantitative easing.

Bank governor Mervyn King said the policy would eventually work.

The move was greeted with caution by Essex Chamber of Commerce. Chief executive John Clayton said: “I have mixed feelings. We can understand people trying to stimulate the economy and it shows they want to help.

“But we are in uncharted territory with this latest cut.

“It is done with the best intentions, but it might have some unintended consequences.

“There will be some definite losers now, with people who are living off savings or saving money.

“Hopefully, it will work. We will have to wait and see.”

Terry Taber, of the Essex Federation of Small Businesses, added: “Providing the banks are making loans out to businesses, it will be of use.

“Obviously, banks want to protect themselves, but if there is a good, solid case for money to be lent to a business, then banks should do it.”