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Rate cut 'welcomed' by investment market

07 December 2007 / by None
The cut to the base rate of interest by the Bank of England came as a "welcome" surprise to the investment markets, an expert says.

F&C's April LaRusse noted than many observers had anticipated a hold in the interest rates until early next year.

However the monetary policy committee (MPC) cut the interest rate by 0.25 per cent to 5.5 per cent.

Ms LaRusse said she thought the decision would have been a "very tight one" and the MPC minutes would reflect this when published.

"What we are seeing is that the Bank has brought forward the first of the rates cuts expected in 2008," she concluded.

"But we don't expect to see any further moves until there is more evidence of economic growth slowing and an easing in inflationary pressure."

She also speculated that oil prices were causing some concern over future rises in inflation, which currently stands at 2.1 per cent.

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