Commenting on today’s MPC decision, David Kern, Economic Adviser to the British Chambers of Commerce, said:

"Although this move was expected, sadly it is overdue and a reduction to 5.00 per cent is no longer sufficient. We urge the MPC to consider a further cut in rates in May to 4.75 per cent.

"The ominous warnings in the Bank of England’s recent Credit Conditions Survey highlight the growing risks that the credit crunch may be worsening. Therefore, it is vitally important to ensure that problems in the financial sector and in the housing market do not damage wealth-creating businesses.

"We acknowledge that inflation remains a serious problem, meaning the MPC cannot afford to cut rates too aggressively. But, the threats to growth have become immediate and the MPC must be more pro-active. One cannot dismiss the danger that falling house prices may harm consumer spending and the wider economy. Undue delay in acting, threatens to reduce the effectiveness of interest rate cuts that the MPC itself has anticipated already."