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Bank cuts base rate by 0.25%

As had been widely anticipated by analysts, the Bank of England today cut the base rate in inflation by 0.25 per cent. The move brings the key lending rate down from 5.5 per cent to 5.25 per cent and is the second such cut in the last three months. The reduction is intended to stimulate the property market, which has recently shown signs of a slowdown, as well as restore consumer confidence and relieve pressure on banks. Wendy Lee, commercial director at Newcastle Building Society, welcomed the move, but said more cuts would be needed to prevent the mood of economic malaise from spreading. She said: "This reduction is obviously good news for home owners and buyers, and especially for those 1.4 million people who are coming off low rate fixed term mortgages this year, for whom every reduction makes a big difference."A single cut obviously won’t solve the current pressing economic issues, and I would expect the Bank of England to follow the Federal Reserve’s lead in making further cuts through the year, though they would be very unlikely to be as dramatic as those seen in the US last month."

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