The Monetary Policy Committee decided bank rates of theBank of England 2007. 5.50% was the bank base rate in December 2007. The Government put in all efforts to prevent the inflation target rate from getting strayed.
Bank rates of the Bank of England 2007 was done as per the requirements of the financial market conditions prevailing in the market and to attend to the economic slowdown, which was gradually showing signs of intensification globally.
Bank Base Rates of the Bank of England:
Given below are some of the bank base rates of the Bank of England for the year 2007:
As of January 2007 the bank base rate was found to be 5.25%.
In the month of May, 2007 the bank base rate was 5.50%.
The bank base rate recorded in July 2007 was 5.75%.
The bank base rate was found to be 5.50% in December 2007.
Reason For Reduction In Rates:
The Bank of England reduced bank rates in December 2007 by 0.25% and the bank rate stood at 5.50%. The body, which controls interest rates-the Monetary Policy Committee, took this decision. The Monetary Policy Committee explained their decision by saying that it was required to reduce the interest rate so that the inflation target of 2% could be attained. As seen above, the last time the interest rate change occurred in July 2007 when the interest rate had increased by 0.25% taking the rate of interest to 5.75%.
Reduction In Consumer Spending:
Despite the fact that there had been a sound growth in the GDP in the previous 2 years, the slowdown was getting the better of the economy of United Kingdom. As per the forward-looking statements pertaining to households as well as businesses, it was found that consumer spending was becoming moderate. Moreover, a trend was developing whereby the banks were becoming exceedingly cautious about the money they credited out to the individuals seeking loans.
Consumer Price Index Or CPI:
2.1% was the CPI inflation in the month of October 2007. It was anticipated that the two factors, which could push inflation up were price of energy and price of food. It was reckoned that since the growth in demand was slowing down, supply capacity should not be pressurized and this would put inflation back on a desirable target.
Last Updated on : 30th July 2013