(1888PressRelease)
November 11, 2008 - London, The new rate of 3 percent is the lowest level since 1955. The continued financial crisis and unavailability of credit to household and businesses were cited as reasons for cut by the Bank.
The rate cut comes after a series of economic data released this week suggested a recession. "Business surveys and reports by the Bank's regional agents point to continued severe contraction in the near term. Consumer spending has faltered in the face of a squeeze on household budgets and tighter credit. Residential investment has fallen sharply and the prospects for business investment have weakened. Economic conditions have also deteriorated in the UK's main export markets," the Bank said in a statement while talking about its decision to cut rates.
"There has been a very marked deterioration in the outlook for economic activity at home and abroad. Moreover, commodity prices have fallen sharply," the Bank stated. The Bank also predicted a sharp fall in inflation figures as high prices of commodities like oil ease.
As the financial crisis continues to spread through Europe, markets are hoping for a similar move by the European Central Bank to stave off a recession.
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