Interest rates continue tumble of .25%

Posted 2008-02-14

Because of clear signs of the slowing UK economy, the Bank of England dropped interest rates by one-quarter per cent to 5.5%. This additional decrease in rates came as a welcomed reprieve for borrowers; especially since it arrived on the heels of E. On (the major power company) raising its prices to consumers.
Energy and the cost of its delivery, is poised to become the hot topic among consumers and economists alike as the price of oil continues to fluctuate at record breaking highes. These painful realities are being felt on a global scale, while industrialized nations strive to maintain economic balances between costs and inflation.
Ray Boulger, of John Charcol, offered: “With the Monetary Policy Committee (MPC) receiving significant criticism for not cutting the rate for a second consecutive month in January, after a unanimous vote for the December cut, together with discussion on whether a 0.5 per cent cut might be necessary to achieve economic stability, there was never any real doubt on the outcome of today’s meeting.” Mr. Boulger also added that the MPC is now effectively “running hard to stand still.”
The nine members of the MPC vote every month and the decision it makes on interest rates are based on the results.
Necessitating a watch on inflation as well as addressing the slowing economic growth, the Bank ruled out a bigger cut. Maintaining a timely balance of all economic factors can be a daunting task; but any economist can attest that making too great a cut in rates in too short a period of time can bare negative consequences of its own. Monetary balance, common sense borrowing and transparency in lending will be key aspects in assisting a healthy economy in the UK.

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