Hoorah for interest cut but we need another one soon

After a turbulent few weeks, the Bank of England yesterday delivered a soothing balm to Britain's hard-pressed borrowers with a quarter-point cut in interest rates.

- JAMES MOORE

The move was widely expected and entirely justified. If you believed the forecasts - sensible folks treat them with a high degree of scepticism – inflation was supposed to be above the 2 per cent target of the rate-setting Monetary Policy Committee (MPC) of the Bank at this point.

It undershot this and all the forecasts at 1.7 per cent. Not even the dizziest of optimists expected that. The hard medicine prescribed by the Bank to restore price stability is doing its job, as the MPC observed in its minutes. They cited “continued progress in disinflation, particularly as previous external shocks have abated”.

For those with mortgages, and for those looking to take them out, not to mention the nation’s small businesses, what really matters now is what comes next. Life is still tough for them. Will there be some festive cheer with another cut in December?

The MPC’s vote went 8-1, which was a more emphatic result than I expected (the lone dissident was rate hawk-in-chief Catherine Mann). We can confidently predict that the leading dove Swati Dhingra will vote for a second cut, and that Mann will stick to her guns too. There are differing views among the rest about how much scope they have to further ease rates.