Bank slashes interest rates by a quarter per cent
Posted 2008-02-16
The Bank of England has reacted to slowdown signs by cutting interest rates by 0.25 per cent to 5.5 per cent.
Although widely expected, it came as a welcome relief for borrowers and was announced a day after E.On became the latest major power company to raise prices.Ray Boulger, of John Charcol, said: “With the Bank’s Monetary Policy Committee (MPC) receiving significant criticism for not cutting the rate for a second consecutive month in January, after a unanimous vote for the December cut, together with discussion on whether a 0.5 per cent cut might be necessary to achieve economic stability, there was never any real doubt on the outcome of today’s meeting.”
He added that the MPC is now effectively ‘running hard to stand still’.
The Bank ruled out a bigger rate slash in an effort to ease slower economic growth while keeping an eye on inflation.
Meeting every month, the MPC makes decisions on interest rates based on the result of a vote by nine members.
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