by Calculated Risk on 8/04/2005 01:28:00 PM

As expected, the BoE cut the Repo rate by 25 bps. The BoE believes that slackening demand will keep inflation in check.

...the Committee judged that a decrease of 0.25 percentage points in the repo rate to 4.5% was necessary to keep CPI inflation on track to meet the 2% target in the medium term.

The minutes will be released on Aug 17th and it might be interesting to see the vote on the rate cut. Last month was 5 to 4 against a cut. The Financial Times reports:

The first rate cut by the Bank of England in two years was widely expected and had little immediate effect on financial markets. But it was an important symbolic moment, especially given the contrast with the US Federal Reserve which is still committed to raising rates.
...a lot clearly depends on the UK's consumers. The housing market has stabilised, rather than collapsed, but that still seems to have weighed on spending patterns. Some, however, would argue that the UK is still seeing the effect of last year's rate tightening. As that fades, spending should pick up in the second half of the year. If the optimists are right, this rate-cutting cycle may turn out to be short.