FXstreet.com (Barcelona) - The Bank of England's decision to cut interest rates to 5.5% at December's meeting was approved by 9 votes to none in a context of uncertainty in financial markets and global smooth economic slowdown, according to the Bank's minutes.
The Bank assessed that the risks from the turmoil on financial markets are today greater than upside inflationary risk, although, the inflation report for November forecasts inflation to grow over 2.0% annual rate in the first months of 2007. So the belief in markets seemed to be that policymakers' concerns about the adverse impact of the credit shock would outweigh any concerns about heightened inflationary pressures.
International economic indicators point out to a slight slow down, although US GDP growth has been revsed up, hthe housing market remains at historically low levels, while consumer confidence is gng through a downward trend, same accounts for the Euro Zone and oil prices have been volatile over the last month. Against that background, the minutes state, the Committee judged an immediate decrease in the bank rate of 25 basis points to meet the inflation target in the medium term.