Bank of England cuts rates

News Category: Management

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The Bank of England's Monetary Policy Committee (MPC) has voted to cut interest rates by 0.25 per cent, so that they now stand at 5.5 per cent.

The Bank said that the move came in response to a downturn in conditions in the financial markets - which was leading to a "tightening in the supply of credit to households and businesses is in train, posing downside risks to the outlook for both output and inflation further ahead".

"Although output in the United Kingdom has expanded at a brisk pace for the past two years, there are now signs that growth has begun to slow. Forward-looking surveys of households and businesses suggest spending is moderating, broadly in line with the projections contained in the November Inflation Report," it added.

"CPI inflation was 2.1 per cent in October. Higher energy and food prices are expected to keep inflation above the target in the short term. Although upside risks to inflation remain, which the committee will continue to monitor carefully, slowing demand growth should ease the pressures on supply capacity, bringing inflation back to target in the medium term," the Bank continued, as it explained its decision.

According to the MPC, a rate cut was necessary if its consumer product inflation target was to be met.

This news should be welcomed by landlords, as it could give the UK housing market a much needed boost after three consecutive months of price drops.

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