Rate cuts must be quicker and deeper, says Rawstron

The Bank of England's decision today to cut interest rates by 0.25% is too little too late, according to the head of GVA Grimley in the North West.

The monetary policy committee cut interest rates to 5%, as widely predicted, acting to offset the effects that renewed strains in money markets are having on household and corporate borrowers.

Mark Rawstron, GVA Grimley's regional senior director, said: "More aggressive action on interest rates is what the economy needs now.

"The reduction in interest rates is welcome but there is a grave risk of the current economic slowdown, which so far has been mild, becoming much more serious if more aggressive action on interest rates does not occur quickly.

"This is the quiet before the storm and the Bank of England are treading too carefully. The fear of higher inflation and a weaker pound will be outweighed by the fear of a possible recession and, as a marked economic slowdown is now inevitable, this will itself ensure a fall in the rate of inflation later this year. The occupier market will inevitably weaken this year, but early significant action on interest rates would limit the effect on employment growth, occupier demand and rental growth and may even also help to free up lending, lessen the cost of borrowing and the rise in property yields."

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