UK cuts key interest rate

September 18, 2001 Posted: 1136 GMT

LONDON (CNN) -- The Bank of England has cut its key repurchase rate by one-quarter percentage point to 4.75 percent.

The move came Tuesday after the European Central Bank, U.S. Federal Reserve and other banks around the world reduced their rates in a bid to bolster the world economy following last week's terrorist attacks on the U.S.

Ryan Shea, of Bank One, told Reuters: "I'm pleased to see they've decided to move in line with everyone else.

"Twenty five basis points is a little bit disappointing and that could highlight the fact that they are still a little bit concerned about domestic growth with

consumer spending remaining so strong."

The BoE said it had called a special meeting of its Monetary Policy Committee to vote on the reduction after considering the reaction of financial markets and other central banks to the tragic events in the U.S.

BoE says concerned for world economy

The BoE said in a statement that falls in stock markets around the world, and the likely impact on confidence, suggested a weaker outlook for global activity than had appeared likely at the Committee's meeting earlier in September.

It is too early to make an informed judgment about the scale of the impact on the UK economy. But the direction of that impact and the associated risks are clear, the Committee said.

"The MPC's move clears up the uncertainty about the Bank of England's intentions and should be very much welcomed in that regard," Philip Shaw, of Investec, London, told Reuters.

"The accompanying statement clearly sets out the risk to activity and inflation... given the recent attacks on America. We may well see the committee bringing rates down by a further 25 basis points at its scheduled meeting in October," he added.

The Bank had previously trimmed rates four times this year in quarter-point steps to 5 percent as the global economic slowdown pushed companies to cut jobs in the UK and internationally.

But the situation in the U.S. has forced Britain, along with other countries, to act rapidly to stave off the threat of recession.

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