|
UK rates cut .25 percent
|
 |
October 8, 1998: 7:47 a.m. ET
Bank of England lowers key short term repo rate to 7.25 percent
|
LONDON (CNNfn) - The Bank of England Thursday shaved 0.25 percent off its repo rate, the UK's key short term interest rate, becoming the latest central bank to cut rates in a bid to stave off global recession. It is the first cut since June 6, 1996.
The bank's Monetary Policy Committee blamed the deteriorating international economic and financial environment for its decision.
"In the domestic economy, surveys and reports from the Bank's regional Agents have indicated a decline in business and consumer confidence," the committee said.
The bank said the outlook for demand and output has weakened, and that despite continuing tightness in the labor market and the fall in the exchange rate, risks of inflation falling below the target of 2.5% have increased.
The FTSE, where traders had hoped for a larger cut, fell on the news. It was down 2% before the decision but fell away to 2.76% down, losing 133.2 points, to 4828.9 after the bank's announcement.
But sterling strengthened on the news, moving up to 1.7265 to the U.S. dollar compared with 1.7282 before and 2.7591 to the mark compared with 2.7491 before the bank's announcement. 
|
|
|
|
|
 |
|
