Base rate reduction spurred by energy costs

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Following the Bank of England monetary policy committees decision to lower the base rate of interest by 25 basis points to 5.25 per cent, the rising cost of energy bills has been cited as a determining factor in the move.

According to financial services provider Abbey, the decision is likely to have been spurred by the elevated cost of utilities in recent weeks.

The organisation also suggests that the upcoming publication of the quarterly inflation report by the Bank could be an indicator of how the economy is likely to develop in the immediate future.

Barry Naisbitt, chief economist at Abbey, comments: "The reduction should help to bolster consumer confidence and support economic activity at a time of continued uncertainty."

He adds that the committee is "well aware that recent energy price rises, together with other factors, are likely to raise inflation".

Customers of E.ON may be celebrating in relatively muted terms however, following the news that the utilities provider is to hike its rates by 9.7 per cent for electricity and 15 per cent for gas.

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