Unanimous vote in Bank rate decision

22 October 2008

9-0 vote to make 0.5% cut to UK interest rates

According to its minutes, all members of the Bank of England Monetary Policy Committee (MPC) voted in favour of the 0.5% emergency cut in interest rates to 4.5% earlier this month.

The MPC said the current strains on the stock market and the latest economic figures indicated that the UK economy was experiencing a sharp downturn.

The bank said: “All these developments pointed to the need for a relaxation in monetary policy.”

The majority of analysts believe that the MPC will reduce rates again when it meets early in November.

Mervyn King, the Governor of the Bank of England, informed the remaining eight members of the MPC about the discussions of potentially cutting interest rates at the same time as other central banks, including the European Central Bank and the US Federal Reserve, and then proceeded to invite them to vote on whether England should also make the move.

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

David Kern, economist at the British Chambers of Commerce said: “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.”