Nelson Mortgages

Industry officials from the British Chambers of Commerce have called for the Bank of England to cut interest rates again. The bank of England hiked up rates five times between August 2006 and July 2007, taking them up by a total of 1.25% to 5,75%. The rates then remained unchanged until December 2007, when they fell by 0.25% to 5.5%. Many were expecting a further fall in January given the marked slowdown in the economy, but the Bank of England also had to consider inflationary pressures and the base rate remained unchanged.

Officials from the British Chambers of Commerce now state that just a modest cut in interest rates could help to ease the effects of the credit crunch, which are set to continue through the year, as well as improving consumer confidence and improving the economy. The BCC said that further interest rate cuts could help to fend off a recession and help to eliminate any significant risk to the economy.

Many industry officials thought that the Bank of England would put concerns about inflation to one side and worry more about the slowing economy when deciding whether to reduce rates in January. However, with the rate stuck at over 2% because of rising food and petrol costs the central bank has evidently had to consider the risks of rising inflation, making it difficult for officials to decide whether to keep the rate steady or cut the rate.

One officials from the BCC said that he understood the pressures and the different factors that the Bank of England had to face, but he also added that just a small interest rate cut could help to ease the money markets and the effects of the credit crunch.

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