Lower rates now, urges MPC member

A member of the Bank of England's monetary policy committee (MPC) has said there needs to be a cut in interest rates very soon to avoid an economic slump.

Such a move, which could cut the cost of mortgages, may boost the housing industry and lead to an increase in building.

Professor David Blanchflower, who was the only MPC member to vote for a cut in this month's meeting, told the Guardian that the present 5.5 per cent base rate was "too restrictive".

He suggested that to go on holding it for fear of unleashing inflationary pressures was akin to "fiddling while Rome burns", suggesting the priority should be to avoid an economic downturn.

Minutes of the January MPC meeting showed that the other eight members believed the inflationary conditions "worsened markedly" since December, justifying the decision to hold the base rate.



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