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Interest rates cut to 0.5%

The Bank of England has cut interest rates from 1% to 0.5%, a record low.

This was the sixth time the Bank had reduced interest rates since October.

The Bank of England will also boost the amount of money in the system by undertaking a programme of asset purchases worth £75 billion. It is hoped this will kick start lending by banks.

Stephen Robertson, director general of the British Retail Consortium, urged a cautious approach to so called quantitive easing.

Robertson said: “The key issue is not the cost of credit but its availability. With the Bank getting close to running out of road, it’s hard to see what another rate cut now can achieve other than further undermining exchange rates and savers’ incomes.

“The BRC’s Shop Price Index shows shop inflation rising as the cost of importing goes up and UK produce becomes more attractive for overseas buyers, restricting supplies at home. 

“Making more money available in the UK economy is the right objective. Businesses and customers need better access to affordable credit, but caution must be exercised. Mishandled, ‘quantitative easing’ could add to inflationary pressure which we’re already seeing from the weak pound.”

 

 

 

 

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