Why the BoE acted on cost of borrowing - Business - Evening Standard
       

Why the BoE acted on cost of borrowing

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10 April 2008

The Bank of England ordered today's quarter-point reduction in interest rates despite saying it expects inflation to rise further this year, "reflecting the impact of higher energy and food prices as well as the recent depreciation of sterling on import costs".

It said the cut was justified because "credit conditions have tightened and the availability of credit appears to be worsening.

In the UK, business surveys suggest growth has begun moderating and that a margin of spare capacity will emerge during this year. This should help keep domestic inflationary pressure in check in the medium term".

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