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Interest rates trimmed to 5.5%

The Bank of England has cut UK interest rates to 5.5%, from 5.75%, giving retailers a welcome boost ahead of Christmas.

The Bank of England said the rate had been cut due to signs that the economy has begun to slow.

A statement said: "Conditions in financial markets have deteriorated and a tightening in the supply of credit to households and businesses is in train, posing downside risks to the outlook for both output and inflation further ahead."

Although risks to inflation remain, the Royal Bank of England Committee said it will continue to monitor the situation carefully. It added: "Slowing demand growth should ease the pressures on supply capacity, bringing inflation back to target in the medium term."

BRC director-general Kevin Hawkins said: “Customers and retailers will be relieved the Bank has not delayed this overdue rate cut again. Putting it off would only have increased the chances of the economy’s downward momentum becoming stronger and that much harder to reverse.

"But with customers under severe pressure, it is only a first step to reviving consumer confidence and will make only a marginal difference to spending this side of Christmas."

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