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| UK interest rates trimmed to 5.5% | UK interest rates trimmed to 5.5% |
| (10 minutes later) | |
| The Bank of England has cut UK interest rates to 5.5% from 5.75% amid signs that the economy is slowing. | The Bank of England has cut UK interest rates to 5.5% from 5.75% amid signs that the economy is slowing. |
| Expectations of a rate cut had risen in recent days after figures indicated that economic conditions had deteriorated over the past few weeks. | Expectations of a rate cut had risen in recent days after figures indicated that economic conditions had deteriorated over the past few weeks. |
| Analysts had said that the Bank's decision was one of the hardest it had faced during the past decade. | Analysts had said that the Bank's decision was one of the hardest it had faced during the past decade. |
| This was because of concerns about inflation and the impact that a rate cut may have on price growth. | This was because of concerns about inflation and the impact that a rate cut may have on price growth. |
| Bleaker picture | |
| The cut in the cost of borrowing by the bank's Monetary Policy Committee (MPC) was the first since August 2005. | The cut in the cost of borrowing by the bank's Monetary Policy Committee (MPC) was the first since August 2005. |
| Interest rates have risen five times since the middle of last year, but the Bank had kept rates on hold since July. | |
| The Bank has been keen to keep price growth under control, and many analysts had predicted that they would want to see oil and food cost pressures abate before moving to lower interest rates. | |
| However, surveys this week have shown falling house prices and a slump in consumer confidence. | However, surveys this week have shown falling house prices and a slump in consumer confidence. |
| It is about making sure that the slowdown, which seems to be happening, does not get out of control Evan DavisBBC economics editor | |
| On Wednesday, Halifax reported that UK house prices dropped 1.1% in November, saying that higher borrowing costs and increased mortgage repayment costs were taking their toll. | On Wednesday, Halifax reported that UK house prices dropped 1.1% in November, saying that higher borrowing costs and increased mortgage repayment costs were taking their toll. |
| At the same time, a report from rival lender Nationwide showed that its measure of consumer confidence had seen the biggest monthly decline since the survey began in 2004, sliding by 12 points to 86 last month. | At the same time, a report from rival lender Nationwide showed that its measure of consumer confidence had seen the biggest monthly decline since the survey began in 2004, sliding by 12 points to 86 last month. |
| A number of retail and leisure companies have also warned of problems and that they are seeing a slowdown in demand on the High Street. | A number of retail and leisure companies have also warned of problems and that they are seeing a slowdown in demand on the High Street. |
| BBC economics editor Evan Davis said that Thursday's rate cut was aimed at making sure the economy did not slow too quickly. | BBC economics editor Evan Davis said that Thursday's rate cut was aimed at making sure the economy did not slow too quickly. |
| "It is about making sure that the slowdown, which seems to be happening, does not get out of control," he explained. | "It is about making sure that the slowdown, which seems to be happening, does not get out of control," he explained. |