Commenting on today’s MPC decision to cut interest rates to 5.25%, David Kern, Economic Adviser to the British Chambers of Commerce, said:
"The MPC has shown commendable flexibility and has made the correct decision. The cut in rates will help to alleviate potential dangers facing the economy.
“A cut in rates was clearly needed to counter the growing international threats emanating from the US, and to unblock the dangerous obstacles preventing the banking system from operating smoothly. Threats to growth are much bigger now than risks of higher inflation. Worrying signs that the UK housing market is weakening rapidly reinforce further the case for a cut in rates.
“Today’s decision will give a much-needed boost to business confidence. The MPC will have to proceed with caution following today’s decision. But, with global risks likely to persist, and with credit conditions remaining too tight, a further small cut in rates may be required early in 2008.”