Oh, they did...
BoE cuts base rate by a quarter point to 5.50 pct; 1st cut in over 2 yrs UPDATE
Thu, Dec 6 2007, 12:28 GMT
afxnews.com
(adds BoE comments)
LONDON (Thomson Financial) - The Bank of England has cut borrowing costs for the first time in over two years.
The rate-setting Monetary Policy Committee (MPC) cut its benchmark Bank rate by a quarter point to 5.50 pct, its first reduction since August 2005.
The MPC said that although output has expanded at a brisk pace for the past two years, there are now signs that growth has begun to slow.
It cited forward-looking surveys of households and businesses which suggest spending is moderating.
Furthermore, it said conditions in financial markets have deteriorated, adding that it expects a tightening in the supply of credit to households and businesses.
These factors, the MPC believes, pose downside risks to the outlook for both output and inflation further ahead.
It predicts that inflation will stay above the 2 pct target in the short term led by higher energy and food prices. While upside risks to inflation remain, slowing demand growth should ease the pressures on supply capacity, bringing inflation back to target in the medium term, it added.
Today's vote to lower borrowing costs is likely to have been close.
Though the markets moved to price in a cut after a run of softer economic data, the economists' fraternity was less sure given ongoing concerns about inflation.
Less than a half of the economists polled by Thomson Financial News predicted the MPC would lower the benchmark rate although there was widespread agreement that the decision would have been one of the closest since the BoE was granted independence a decade ago.
Minutes to the meeting will be published on Wednesday, Dec 19.
pan.pylas@thomson.com
pp/ss/ss/pp
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