Bank of England cuts base rate

5 April 2001

Bank of England cuts base rate

By FWi staff

THE Bank of Englands Monetary Policy Committee voted has voted to reduce its base interest rate by 0.25% to 5.5%.

The move is intended to stave off the effects of global slowdown, led by the USA, on the UK economy.

The recent fall in equity markets and short-term effects of foot-and-mouth disease also influenced the decision.

Inflation is below target, partly due to the strong Pound, and is likely to remain so for some time.

Despite a tight labour market, earnings growth remains moderate.

The Monetary Policy Committee said the cut was necessary to meet the governments 2.5% inflation target in the months ahead.

The underlying rate of inflation (excluding mortgage repayments) was 1.9% in March.

The Bank last cut the interest rate in February, to 5.75%, ending a 12-month run at 6%.

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