Forum Brief: Interest rates

The Bank of England has announced a quarter point cut in interest rates.

The monetary policy committee revealed its decision at midday on Thursday, after discussions led by Mervyn King in his first meeting as chairman of the MPC.

Forum Response: Construction Products Association

Jean Emblin, external affairs director at the Construction Products Association, said: "We applaud the decision by the Bank of England to make a second interest rate cut this year."According to the Association's latest market trends report there has been a slowing in infrastructure output during the first quarter of 2003. This cut will, therefore, provide an added boost for construction product manufacturers, although it must be said that the sector will only see real benefit if government's expenditure plans stay on track."This reduction will also kick-start demand within the wider manufacturing industry and halt the decline in output that has existed since the beginning of 2001. Industry has been calling for a further cut in interest rates for some time now, and it is pleasing to know that our voice is finally being heard."

Forum Response: Institute of Directors

Ruth Lea, head of the policy unit at the IoD, said: "We welcome today's cut in interest rates. There is no doubt that the global economy has many deep-seated problems, and these are dragging the British economy down.

"Domestically the manufacturing sector remains in recession and consumer spending and the housing market, the parts of the economy that underpinned growth last year, are now moderating.

"The economy needs stimulating - a cut in interest rates and the fall in sterling against the euro since the beginning of the year, though it has firmed recently, should both help."

Forum Response: Council of Mortgage Lenders

Michael Coogan, director general of the CML, said: "The fact that the monetary policy committee have today decided to cut interest rates confirms that they do not see the current state of the housing market as a barrier to taking measures to benefit the wider economy.

"The Bank's forecasts suggest a slowing down in house price growth to zero over the coming year, and although we expect to see positive growth continue, we firmly believe that the housing market is achieving a natural slowdown. So this rate cut is unlikely to further stimulate the demand for mortgages.

"Lenders will be watching the markets and considering funding issues in deciding how to react to today's rate cut."