There is a "continuing problem" of mortgage lenders not passing on recent cuts to the base rate on to their own customers, it has been claimed.

This month, the base rate was cut by a further quarter-point by the Bank of England's monetary policy committee, leaving it to stand at 5.25 per cent.

However, Paul Dales, UK economist with Capital Economics, commented that money market rates have not followed the downward trend and have actually risen since the cut.

Mr Dales said: "There does seem to be a kind of stickiness in that lever of brining monetary policy to the markets and then the economy."

He explained that the interest rate reduction has made an impact on the pound which will help not only consumer funds, but also confidence in the economy.

"It's not that monetary policy is now impotent, it's just maybe a bit less effective than before," the economist added.

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