Rate cut welcome but further support needed, says IPPR

Reacting to today’s decision by the Bank of England’s Monetary Policy Committee, William Ellis, senior economist at IPPR, said:  

“The Bank of England’s decision to lower interest rates today by 25bps is welcome support for the economy. This follows lower wage growth, higher unemployment and inflation dropping faster than expected in data releases this week. This indicates a lower path for inflation moving forwards, providing the Bank with more headroom to cut rates without risking a resurgence in price growth.

“We expect inflation and labour markets will continue to cool, and further cuts to interest rates will be needed to protect economic growth and ensure inflation hits the 2 per cent target.  

“But the Bank can do more than just tinker with interest rates. As with the US Federal Reserve and the European Central Bank, the Bank of England should have stopped active gilt sales. These sales are not needed to control inflation and currently place unwarranted pressure on UK borrowing costs and the taxpayer.”