Base rate cut to 5% - commercial mortgages

10 April 2008

The Bank of England''s monetary policy committee (MPC) has announced today that it is shaving 0.25 per cent off the base rate, taking it down to five per cent.

In its lunchtime announcement, the body said that it had made the decision after assessing the comparative strength of upside and downside risks to consumer prices index inflation.

Delivering its verdict on this issue, the MPC stated: "The balance of these risks to the inflation outlook in the medium term justifies a cut in Bank rate this month."

The reduction in the base rate may help bring down the cost of commercial mortgages.

Earlier today, Lloyds TSB chief economist Trevor Williams told the Daily Telegraph he did not believe the overall property market downturn would be ended by a cut just now, as banks saw a correction in the market as being an inevitable and necessary phenomenon.

However, he added, the market would soon bottom out and "when it does it will be a good time to invest".