FXstreet.com (Barcelona) - The Bank of England has decided to lower its key interest rate by 25 basis points to 5.25% after its monthly Policy Meeting.

The decission, widely expected by the analysts has been justified by Bank. The prospects for output growth, states the Bank in its news release, have deteriorated , while the situation in global finantial markets has not improved, credit conditions for both companies and households are tightening in the UK , and consumer spending has eased, the bank assesses that these developments pose downside risks to inflation.

Nevertheless the Bank stresses the possibility of energy and food pushing inflation sharply higher in the next months, whereas the high level of the sterling may boost import costs.

The bank affirms its concern to balance the risk that a sharp slowing in activity pulls inflation below the target in the medium term against the risk that elevated inflation expectations keep inflation above target.