23 July 2008
A member of the Bank of England's Monetary Policy Committee has called for a cut in interest rates to alleviate the pressure on consumers. Professor David Blanchflower warned that the UK could slip into recession unless action is taken to reduce the cost of borrowing and kick-start the economy. "It's not too late to stop it but we have to act right now. Monetary policy has been far too tight for too long," he told the Guardian. Earlier this month the MPC voted to keep interest rates on hold at five per cent, citing inflationary pressures as the main driver behind their decision. But Professor Blanchflower believes sluggish economic growth is a more pressing problem and says a rate cut is necessary to breathe life back into the credit markets. Lower base rates could translate into lower repayment costs for those with secured loans. Minutes from July's rate-setting meeting will be released today and Mr Blanchflower is widely expected to have gone against his colleagues and voted for a rate reduction. The next rate decision will be announced on August 7th.
© 2008 Adfero Ltd
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