Bank of England cuts interest rates

The Bank of England’s monetary policy committee cut the UK interest rate by a quarter of a percentage point on Thursday to 4.5 percent.

It was the first rate cut in two years and exactly one year since the rate has moved at all.

Although it made the rate cut, the Bank was careful to say that this was not the beginning of a series of cuts, explaining that while the cut was appropriate in the short term, recent gains in equity prices and declines in the currency exchange rate should stimulate economic activity in the longer term.

One analyst said that he expects the new rate to hold through the end of the year, and another said that while rates might fall more later, the Bank was not in a great hurry to push through more declines.

Business leaders greeted the rate cut with approval and urged that more cuts be made later in the year on the basis that lower interest rates will stimulate economic growth and increase the confidence of both business and consumers.

Meanwhile in the eurozone, the European Central Bank let interest rates there remain the same, at 2 percent, on evidence that the economy in the region is improving.

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