4 August 2005
In a move expected to herald good deals for borrowers, the Bank of England (BoE) today cut its baseline interest rate.
The BoE's Monetary Policy Committee made the decision on the basis of a slowdown in the UK economy.
It is hoped that the quarter-point cut, from 4.75% to 4.5%, will revive growth and consumer spending.
The news makes particularly good news for those looking for a loan, because the interest borrowers repay on their loan will be reduced from now on.
Pressure groups were particularly happy with the outcome. Graeme Leach, chief economist at the Institute of Directors (IoD), said: "The IoD had called for a quarter point reduction in interest rates and so today's decision by the Bank was welcome news.
"Failure to cut rates now could have seen a more pronounced 'shift-to-thrift' by companies and consumers. The new lower rate of 4.5 per cent will help put a floor under business investment and household spending growth."
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