FXstreet.com (Barcelona) - The last interest rate cut by the Bank of England, which lowered Bank Rate by 50 Bps to 1.5% was approved by 8 votes to 1 with David Blanchflower in favour of 100 bps rate cut, according to the minutes of January the 7th and 8th meeting.

The Bank defends the decision of lowering the Bank Rate to its lowest level in history, as the right approach to reactivate British economy, once inflation has confirmed its downward trend, and, the move was already priced by the markets.

Blanchflower voted for a more aggressive rate cut, as he considered that the risks of delaying further rate reductions were higher than those of having cut interest rates too much, seen the economic downturn UK is experiencing.

The Bank affirms that the current recession will be deep and could last for a protracted period of time, house prices have continued falling sharply, while it has not been any major improvement in the labour market, on the contrary, unemployment is expected to increase fast, while financial markets remain uneasy; The monetary transmission mechanism was impaired, which would limit the effectiveness of the various monetary and fiscal stimuli, affirms the Bank.