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07 Dec 07 - Investors Cheered By Cut In Rates
Property investors have received a pre-Christmas boost
after the Bank of England voted to cut interest rates. The
Bank's nine-member Monetary Policy Committee opted for a
0.25% reduction in the base rate to 5.5% after recent figures
showed house prices are continuing to fall.
The move is the first reduction in the cost of borrowing
since August 2005, but may indicate that the MPC is concerned
the UK economy is heading for a sharp slowdown. It had been
concerned that cutting rates too early could push inflation
beyond the Government's 2% target, but recent problems with
liquidity in credit markets have forced it to take a stand.
The Bank said in a statement: "Forward-looking surveys
of households and businesses suggest spending is moderating,
broadly in line with the projections contained in the November
inflation report. "But conditions in financial markets have
deteriorated and 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."
Source: Bank of England
News items supplied by SelectNews, produced by PA Business,
part of the group that owns The Press Association, the UK's
national news agency. Copyright (c) PA Business 2007.
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