Bank cuts interest rates
Published On 10 April 2008
The Bank of England's Monetary Policy Committee (MPC) has opted to cut interest rates.At noon today (April 10th), the MPC revealed that the base rate in the UK would be lowered by 0.25 per cent to five per cent.
The MPC acknowledged that inflation would probably rise in the coming month, spurred by "the continuing impact of higher energy and food prices".
However, it added: "Credit conditions have tightened and the availability of credit appears to be worsening.
"Against that background, the Committee judged that a reduction in Bank Rate of 0.25 percentage points to five per cent was necessary to meet the two per cent target for consumer price index inflation in the medium term."
Trevor Williams, a chief economist Lloyds TSB, said that this month's interest decision was "one of the toughest" the MPC has had in recent years.
He explained: "If the MPC had kept rates on hold, it would have left the economy exposed to a slowdown. But by cutting rates, it has left inflation free to rise even further beyond its target.
"There are some who believe that rates could fall further still, but the likelihood is that today's cut will be the last we will see this year, unless the economic situation deteriorates further."
