7 December 2007
The Bank of England's Monetary Policy Committee (MPC) yesterday voted to lower UK interest rates by 0.25% to 5.5%.
This is the first time the MPC has decided to lower interest rates for two years, having increased them five times since August 2006, but kept them on hold since July.
The outcome of Thursday's meeting comes after the Bank of England found itself under increasing pressure to cut interest rates amid concerns of a slowing economy.
Yesterday analyst Howard Archer from Global Insight described the monthly rate decision as "one of the tightest calls ever".
Commenting on the reduction, economist Roger Bootle told BBC Radio 4 that it would lead to a resurgence in the credit sector and ultimately boost economic growth.
"The impact of this is undoubtedly to slow the economy. If people can't get money, to put it simply, they can't spend it," he said.
"We have been an economy for several years now that has been utterly dependent on the continual flow of credit, and credit has been growing very strongly indeed."
He added that the quarter point reduction was likely to be "the first of many", predicting that rates may fall to 4% by 2009.
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