MPC cuts interest rates

The Bank of England's Monetary Policy Committee (MPC) has decided to cut the base rate of interest in April.

Interest rates now stand at five per cent, following the reduction of 0.25 percentage points.

The move was widely forecast in the weeks leading up to today's decision and comes as little surprise.

However, mortgage borrowers will nonetheless be delighted by the news and will be hoping that lenders will pass on the full saving.

Commenting on the MPC's decision, Barry Naisbitt, chief economist at Abbey, said that it was the right one to take.

"The Monetary Policy Committee today reacted to the evidence of slowing economic growth by announcing a cut in Bank rate, from 5.25 per cent to five per cent," he commented.

"Slowing economic growth, particularly shown by survey indicators of output, and a weaker housing market will have played a part in the decision.

"The reduction should help to bolster consumer confidence at a time of continued uncertainty," he added.

The base rate of interest was last changed to five per cent when it was increased by 0.25 percentage points in November 2006.

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