NEWS

News February release

More good news for homeowners as the Bank of England’s Monetary Policy Committee voted to reduce the official Bank Rate by 0.25% to 5.25%.

Analysts had widely predicted the move, which followed recent cuts in the US, where the Federal Reserve has slashed its borrowing costs to 3% from 4.25%.

Several mortgage lenders said the rate cut would be passed on to borrowers.

The Bank of England, said, in their press release:


'The prospects for output growth abroad have deteriorated and the disruption to global financial markets has continued. In the United Kingdom, credit conditions for households and businesses are tightening. Consumer spending growth appears to have eased. Although the substantial fall in the sterling exchange rate is likely to promote re-balancing of total demand, output growth has moderated to around its historical average rate and business surveys suggest that further slowing is in prospect. These developments pose downside risks to the outlook for inflation.

Given this outlook for inflation, some slowing of demand growth, by reducing the pressure on capacity, is likely to be necessary to return inflation to target in the medium term. 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.

Against that background, the Committee judged that a reduction in Bank Rate of 0.25 percentage points to 5.25% was necessary to meet the 2% target for CPI inflation in the medium term.'

<< BACK