Who benefits from rate cut?
I've just had a call from an astonished individual who has several hundred million pounds that he puts on deposit in various banks.
As of 10 minutes ago, a leading British bank was offering to pay him almost 7% interest for his cash.
That was after the Bank of England's policy rate had been slashed by 1.5 percentage points to 3% - an unprecedented reduction in the history of the Bank's Monetary Policy Committee.
Why does it matter that this holder of squillions is still being offered almost 7%?
Well, if he's being paid almost 7%, what chance is there that small businesses will be able to borrow at less than 10, 12, 14% or more (with the actual rate depending on an assessment of their credit-worthiness)?
Those who most need a substantial cut in the interest they pay - hard-pressed businesses, cash-strapped households - are unlikely to enjoy more than a small reduction.
As I described in my note on Sunday ("Why interest rates are not falling") the transmission mechanism from the Bank of England's policy rate to the interest rates we pay has broken down.
Lenders have - understandably - concluded that the risk of lending has risen very sharply, and are therefore demanding much greater rewards for providing credit.
So at a time when all the indications are that we are in a fairly severe recession, and many companies and individuals are struggling to keep afloat, it's a serious worry that even the kind of evasive action attempted today by the Bank of England may provide only modest succour.