Rate cut 'increases confidence'
Feb 06 2009
The Confederation of British Industry (CBI) says yesterday's (February 5th) interest rate cut will support business confidence.
Following the monthly meeting of the Bank of England's monetary policy committee, the interest rate was reduced by 50 basis points to one per cent - its lowest ever level.
Commenting on the move, the CBI claims it will be welcomed by UK companies, especially when viewed in light of other economic factors.
Ian McCafferty, the organisation's chief economic adviser, explains: 'This drop in rates should support business confidence and, when added to recent cuts of the past couple of months and the fall in the pound, provides a very significant stimulus to the ailing economy.'
However, McCafferty also called on the Bank to use more direct intervention in the corporate lending markets to allow more businesses to have access to finance.
In addition, the British Chambers of Commerce claims UK firms were not surprised by yesterday's cut, with David Kern, chief economist, adding that policy must now shift to freeing up the credit markets and increasing money supply.
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