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Economists question Banks&#39 50-point cut

Leading economists have questioned whether this months 0.5% drop in interest rates was a cut too far.

Concerns that the Bank of England has overestimated the threat of recession appear to be justified by the Bank&#39s own deputy governor, Mervyn King, who rates the UK&#39s chances of recession at only one in 10.

The minutes of the MPC meetings in August, September and October reveal just how fine a line the committee treads between boosting confidence and stifling inflation.

At the emergency meeting called after 11 September, two of the MPC&#39s eight members called voted for a 50-basis point reduction, arguing that the 25 points eventually passed on were “overly cautious” and ran the risk of adversely affecting confidence.

In October, however, MPC members concluded that a 50-basis point cut could “damage rather than sustain” business confidence. They voted for a 25-point reduction on 4 October.

The minutes of the MPC&#39s November deliberations will be published this week. House prices indices, manufacturing output, employment and reports by regional agents are among the factors that influence the committee&#39s decision.

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