Member Article

Interest rates cut again - to 2%

The Bank of England today cut interest rates by 1% to 2% - the lowest figure in more than half a century.

The move came after a chorus of calls by experts for the Bank’s Monetary Policy Committee to make a third consecutive monthly cut following the cuts of 1.5% last month and 0.5% in October.

The North East Chamber of Commerce was quick to respond. Richard Bottomley, president of the NECC, said: “This cut, along with the fiscal stimulus package announced in the Pre-Budget Report, will be a welcome boost to the economy in these testing times.

“Fuelled by fears of deflation, this cut will be aimed at boosting spending by the public. But the MPC must ensure that long-term inflation is not overlooked as any recovery will be severely hampered if this were to happen.”

Liz Mayes, CBI Assistant Regional Director said: “The economy needs a significant monetary stimulus and the Bank has clearly decided this will be best achieved by another big cut in interest rates. What is critical for business and consumers alike is that this reduction is passed on.

“The economy is stalling, inflation is expected to undershoot the Bank’s own target and the headline RPI rate of inflation is likely to turn negative for at least a few months in 2009. We need to see lending improve and to keep business working.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .