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UK interest rates cut by 0.25 per cent

by Scott Bicheno on 7 February 2008, 14:12

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The Bank of England has cut interest rates by a quarter of a per cent to 5.25 per cent. This is the second cut in three months and was widely expected after the US federal reserve hacked three quarters of a percent of it's rate on 22nd January.

Hopes of a more dramatic cute were muted as the inflationary pressure from things like fuel price rises meant that the bank couldn't afford to get too carried away. As ever, those who rely on consumer spending were disappointed the cut wasn't bigger and those who worry about inflation fretted about there being one at all.

Most high street banks and building sociaties have said that they will pass on the cuts in their mortgage rates, so there is some hope that the UK consumer may be encouraged to spend by the news. There was some doubt that the banks would do so as the credit crunch has inflated the rates they charge each other to borrow, but it may take further cuts from the BoE to have a significant effect.

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