Bank of England Reduces Bank Rate by 0.25 Percentage Points to 5.0%

Sunday_Morning

I confess to being no expert on this, but I recognise that the fears of reducing the rate that would lead to an increasing demand for money and therefore inflation might well have receded.

However, it strikes me that the strength of the pound against the US Dollar has protected us to a substantial degree from the substantial rises in the price of oil.

Doesn't reducing rates risk weakening the pound and thereby exposing us more and more to the increasing costs of oil, which then further increases costs and puts pressure on prices?

Gorgeous_George

The Bank of England explain their decision better than me (clicky).

GG

Treadmill

"Against that background, the Committee judged that a reduction in Bank Rate of 0.25 percentage points to 5.0% was necessary to meet the 2% target for CPI inflation in the medium term."

Reducing interest rates to reduce CPI ? They should tell it like it is and say "Gordon told us to do it"