Commenting on the decision of the Monetary Policy Committee of the Bank of England to cut interest rates to 5%, Anna Leach, Chief Economist of the Institute of Directors, said:

“Today’s 5-4 vote by the MPC for a rate cut will give some welcome relief to businesses and households squeezed by the high cost of finance. Although key measures of domestic inflation persistence have not come down as much as the Bank would have liked, they are clearly content that sufficient progress has been made to warrant a slight reduction in rates.

“We’re not expecting much more by way of rate cuts this year. The IoD’s economic confidence measure has improved materially over the past 6 months and broader data on the economy points to momentum holding up despite the high level of interest rates. With wage growth and services inflation still high, and headline inflation expected to rise in the coming months, monetary policy is set to stay restrictive for a good while yet.”