Minutes of the Bank of England's monetary policy committee (MPC) meeting for December have revealed that the decision to cut the base rate was made unanimously.
All nine MPC members backed the one per cent reduction, which brought the rate down to two per cent. The body explained that the move was necessary due to expectations that consumers prices index (CPI) rate of inflation would continue to fall.
And it noted that the recent reduction in value added tax is likely to contribute to this, predicting that it would lower CPI inflation by around one per cent for much of 2009.
This suggests that further cuts could be to come, which may see interest rates lowered for secured loans.
The CPI rate of inflation was 4.1 per cent in November, the Office for National Statistics revealed, down from 4.5 per cent the previous month and 5.2 per cent in September.
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