BOE Lowers Interest Rate to 5%

Following growing fears of a recession, the Bank of The Bank of England cut the benchmark interest rate to 5 percent, however the European Central Bank kept its benchmark rate at 4 percent today.

At the same time the pound has dropped 19 percent against the euro.

It is the third cut in rates since December in a period which the economy has been troubled by the credit crunch and the worst housing slump since 1992.

U.K. growth is slowing following a knock on effect from he U.S. subprime mortgage market crisis, similarly the IMF has predicted the true cost to be around $945 billion.

The Bank of England said in a statement today that the move along with the reduction in the rate of the economy will help to keep inflationary pressures in line.

It was the initial slowdown that encouraged Policy makers to cut rates amongst he treat of inflation, which was running at a nine month high.

At 5 percent the base rate is still the highest amongst among the Group of Seven industrialized nations.

Former Chancellor of the Exchequer Nigel Lawson said yesterday that the Uk was heading towards a prolonged recession, and that credit conditions are not only deteriorating but getting tighter.

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