For many people, midday on Thursday is a period of the week when the attention turns to food. However, this week was slightly different, as the lunchtime news brought a tasty morsel of economic information for the nation to digest. Finally, for the first time in the best part of two years, homeowners can look forward to lower mortgage payments, after the Bank of England cut the base rate by a quarter-point to 5.75 per cent. However, not everyone was as pleased as they might have been and there isn't quite universal agreement about what the future holds The factors that led to the decision have been discussed at length in our news section over the past month, so we're not going to repeat them in much detail here. America is such a major world economic force, that economists are increasingly worried about the effect that a recession there would have on the global economy.
Inflation is another concern for the bank.
They have a government-set target of 2.5 percent, but inflation has been running at well below that level for nearly two years. Whilst it is better to be slightly under this mark than slightly over it, a benign retail price outlook is causing concern that inflation could fall further. Meanwhile the recovery of the manufacturing sector has slowed down again, after fourth quarter gross domestic product figures for Britain were weaker than expected, showing an annual growth rate of just 2.4 percent. The best thing about the MPC decision, as far as most people are concerned, is the fact that it will ultimately mean lower monthly outgoings on mortgage repayments. As long as the banks and building societies do the decent thing and pass on the savings from the rate cut to the consumer, everyone should benefit from more money in their pocket at the end of the month.