SINGAPORE (AFX-ASIA) - Bank of England Governor Edward George said it had been necessary to cut interest rates to offset the impact of external factors and to encourage growth.
""With inflation in the UK running below its target, (and) expected to run below its target, for some time to come, we had in effect seek to offset these dampening external influences by encouraging sustained growth of the domestic environment through reduction in interest rates, which is essentially the explanation of the interest rate cut we've made so far this year," George told participants at the International Monetary Conference.
He did not elaborate.
George said the UK is also being affected by the global economic slowdown.
The BoE in its latest quarterly inflation report said underlying inflation (RPIX) in the UK is expected to stay at around 2.0 pct throughout 2001, before picking up gently to its 2.5 pct target.
The BoE Monetary Policy Committee voted by eight to one to cut the repo rate by 25 basis points to 5.25 pct at its May 10 meeting.