0.25% cut in base rate
The base rate in the UK has been cut by 0.25% taking it from 5.5% to 5.25%. The decision to cut the rates came after this week’s Monetary Policy Committee meeting, where members had to try and balance concerns over rising inflation with concerns over an ailing economy to reach a decision with regards to interest rate movement.
Interest rates have soared between August 2006 and July 2007, with a series of five 0.25% hikes, which have left homeowners struggling to keep up with repayments as a result of higher mortgage costs.
In December of last year the Bank of England cut rates for the first time in two years amidst fears of a slowing economy.
Although a further interest rate cut had been expected in January, committee members voted by majority to keep rates on hold in a bid to try and keep a lid on rising inflation.
However, this month inflation worries have taken a back seat to worries over the economy, and therefore the Bank of England has decided to cut the interest rate.
A statement from the Bank of England read: : ‘The committee needs to balance the risk that a sharp slowing in activity pulls inflation below the target in the medium term against the risk that elevated inflation expectations keep inflation above target.’
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