MPC cuts the base rate

Posted: 07 Feb 2008 12:11:24 GMT

The Bank of England's Monetary Policy Committee (MPC) has cut the base rate of interest.

The Bank of England's Monetary Policy Committee (MPC) has cut the base rate of interest.

The move was widely expected, with the majority of analysts forecasting a 0.25 percentage point reduction.

It comes as the global credit crunch continues to have a huge impact around the globe.

Recent figures have revealed that the housing market is slowing and the MPC's decision to cut the rate will have been driven at least partly by a desire to boost growth in the UK economy.

Immediately after the decision was announced, Nationwide said that it will decrease its base mortgage rate by 0.25 per cent.

It is hoped that other lenders will follow suit, leading to more people entering the market.

Previous rate cuts have seen mortgage lenders criticised for failing to pass on the savings but Nationwide's decision may encourage other lenders to do the same.

The Centre for Economics and Business Research said that the MPC is adopting a 'slowly but surely' approach to bringing interest rates down.

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