Bank cuts base rate

The Bank of England monetary policy committee (MPC) has announced that it has decided to trim the base rate by 0.25 per cent from 5.5 per cent to 5.25 per cent, news which may interest those planning to get on the housing ladder.

In its statement, the MPC said it took the decision to balance the risk between inflation falling well below target due to a major downturn in the economy and an upward surge in inflation caused by rising food and domestic fuel prices.

The MPC acknowledged that there could be a large rise in the consumer prices index above its present 2.1 per cent rate as the year progresses.

Such a situation could limit the scope for further cuts, which may limit any reduction in mortgage costs and consequently make self build a cheaper option.

The decision by the MPC had been widely predicted, with all 60 economists polled by Reuters and 58 out of 61 surveyed by Bloomberg forecasting such an outcome.


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