Page last updated at 09:27 GMT, Wednesday, 22 October 2008 10:27 UK

Bank voted 9-0 to cut UK's rates

Bank of England building
Bank members voted unanimously to cut rates

All members of the Bank of England's rate-setting committee voted for this month's half-point emergency cut in rates to 4.5%, its minutes show.

The monetary policy committee said the stock market turmoil and latest economic figures pointed to a sharp downturn in the UK economy.

"All these developments pointed to the need for a relaxation in monetary policy," said the bank.

Most analysts expect the central bank to cut rates again in November.

Governor Mervyn King briefed the other eight policymakers about the discussions of a co-ordinated move with other central banks, including the US Federal Reserve and the European Central Bank, and then invited them to decide on whether to join the action.

"Given the global nature of the financial market turbulence, there was a strong argument for participating in the proposed international action," the committee said in its minutes.

Commenting on the minutes, David Kern, economist at the British Chambers of Commerce, called for further rate cuts to help hard-hit businesses.

"A further cut in interest rates to 4% in November would be an important step aimed at alleviating the severity of the recession and to help restore business and consumer confidence," he said.

Lower rates

The minutes of the meeting have confirmed many analysts' beliefs that there will be another cut in UK interest rates next month.

"October's minutes echo the gloomy tone of Mervyn King's speech and suggest that the committee will continue to act aggressively in cutting rates, " said Vicky Redwood, of Capital Economics.

Philip Shaw of Investec said: "The committee is talking about the evidence being clearly sufficient to justify a half-point, which hints that another fall in rates seems likely in November."

Mr King admitted in a speech on Tuesday night that the economy was probably entering recession.

But he also pointed to the need to balance the risk of inflation falling below the 2% target against that of the current high rate of rising prices becoming embedded in people's expectations.

In its minutes, the Bank noted that while inflation, now running at 5.2%, could stay high for a while, the risk of it leading to higher wages had diminished because of the weaker economic outlook.

Print Sponsor

Gloomy forecasts for UK economy
22 Oct 08 |  Business
Pound tumbles to a five-year low
22 Oct 08 |  Business
Mervyn King paints bleak picture
21 Oct 08 |  Business

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Sign in

BBC navigation

Copyright © 2019 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific