Bank of England drop interest rate to 3.75%

In a surprise move the Bank of England today cut interest rates by 0.25% taking the UK interest rate to 3.75%, the lowest figure in almost 50 years.

It was widely expected that, despite growing pressures from the UK manufacturing sector, the Bank's monetary policy committee would continue with its cautious 14-month-long approach and hold rates at 4%.

Advocates for a 'wait and see' strategy remain concerned that a cut in interest rates would fuel inflationary trends in a run away housing market and add to the record level of consumer debt in the UK.

However, in a statement the Bank's monetary Policy Committee said: "The Committee reviewed monetary and economic developments in the light of its latest quarterly projections for output and inflation, to be published in the February Inflation Report.

"RPIX inflation has, as expected, moved a little above target, but this is the result of temporarily large contributions from petrol prices and from housing depreciation. These influences on inflation will persist for some time but are expected to unwind further ahead.

"Over the next two years, the prospects for demand, both globally and domestically, are somewhat weaker than previously anticipated. In order to keep inflation on track to meet the target over the medium term, the Committee judged that it was necessary to reduce interest rates by 0.25%."

The latest inflation and output projections will appear in the Inflation Report to be published next week.

The previous change in interest rates was a reduction of 0.5% to 4.0% on 8 November 2001.

The manufacturing sector have broadly welcomed the cut, though the CBI maintained that they had not been seeking an interest rate cut, preferring other measures to strengthen beleaguered manufactures in the UK.

The European Central Bank earlier announced that the eurozone rate would remain unchanged at 2.75%.


Related Northern Ireland News Stories
Click here for the latest headlines.

07 May 2021
Adults Under 40 To Be Offered Choice Of Vaccine Jabs
Adults aged under 40-years-old in Northern Ireland will be offered an alternative to the Oxford/AstraZeneca jab. New advice from the Joint Committee on Vaccination and Immunisation states that under 40s can be offered the Pfizer vaccine due to a link between the Oxford/AstraZeneca jab and very rare blood clots.
27 April 2021
Call For SEN Process To Be Overhauled
The SDLP is urging the Education Minister to "get a grip" after the Education Committee revealed the fact that in 2018/2019, 97% of Special Educational Needs (SEN) appeals were successful.
30 November 2020
Urgent Criteria Change Needed To Support Taxi Drivers
The criteria for a COVID-19 support payment for taxi drivers should be changed urgently so all drivers can receive the support they need, Sinn Féin MLA Martina Anderson has said.
21 June 2021
DUP To Elect New Leader On 26 June
The DUP are set to elect a new leader on Saturday 26 June, Party Chairman Lord Marrow has confirmed. A new leader is being sought following the resignation of Edwin Poots after just 21 days. Lord Marrow said: "The Party Officers have set the date of Saturday 26th June as the date for a meeting to elect a new leader.
15 June 2021
Driving Test Backlog Has 'Veered Out Of Control'
The Infrastructure Minister and the DVA Chief Executive have been challenged on their plan to deal with the current driving test backlog by incoming chairman of the Northern Ireland Assembly's Infrastructure Committee and DUP Upper Bann MLA Jonathan Buckley. Mr Buckley said: "The backlog has veered out of control.