Bank Cuts Interest Rate By 0.5%

The Bank of England has delivered a pre-Christmas boost to hard-pressed manufacturers and retailers by cutting interest rates by a half-point.

The Bank’s nine-member Monetary Policy Committee voted for the third month in succession to reduce its base rate for lending, moving it from 6.75% to 6.25%. However, this falls below the 1% cut which a number of companies had been pressing for.

The cut spurred shares forward immediately after the announcement at noon today but the gains failed to stick. The Bank of England’s decision caused the FTSE-100 Index to leap to highs of 43.6 above Wednesday’s close.

Despite this, falls set in after an hour or so, leaving leading shares up only 9.8 points at 5678.9 at lunchtime.