LONDON (AFX) - The Bank of England said its Monetary Policy Committee has decided to cut its repo rate by 25 basis points to 5.50 pct.
In a statement accompanying the decision, the BoE said that "while growth in final domestic demand has remained firm, there are downside risks to UK activity from the slowdown in the global economy, the recent fall in equity markets and, in the short run, from foot and mouth disease".
It said "these developments could already have affected demand and output growth and may continue to do so, in particular through their impact on business and consumer confidence".
The BoE added: "Inflation is currently somewhat below target, and is expected to remain so for a while. Price and cost pressures continue to be subdued. There is little sign of any easing yet in the labour market but, despite its tightness, settlements and earnings growth have so far remained moderate".
It said the strength of sterling continues to exert a dampening effect on inflation.
Today's outcome follows the 25 basis point cut in February which ended 12 months of steady interest rates.
Of the 22 economists polled by AFX News last week, 15 expected rates to be cut. The remaining seven expected the repo rate to be held.
The minutes of today's meeting will be published on April 18.