LONDON: The Bank of England cut its key interest rate by a quarter of a point on Thursday to five percent, balancing the risks of rising near-term inflation and economic slowdown spread by the credit crisis.
The decision, which was in line with market expectations, took short-term borrowing costs to the lowest level since January 2007 and came amid growing concerns over the country's slowing housing market.
The BoE said in a statement that its rate-setting Monetary Policy Committee had decided that the economy would probably experience a slowing of growth because of the global credit squeeze, and this could send inflation below target in the long term.
The Bank of England said in a statement on Thursday: "The disruption in financial markets could lead to a slowdown in the economy that was sufficiently sharp to pull inflation below the target.
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