Bank of England cuts rates by quarter point

The Bank of England reduced its benchmark interest rate for the first time in two years, saying inflation is likely to slow as higher credit costs hurt economic growth.

The nine-member Monetary Policy Committee reduced the rate by a quarter-point to 5.5 percent. This is the first decline since August 2005, but despite the cut, UK rates are still the highest among the Group of Seven industrialized nations. The European Central Bank kept its key rate at 4 percent in Frankfurt. The U.S. Federal Reserve twice has trimmed its key rate, now 4.5 percent.

Expectations of a rate cut had risen in recent days after figures indicated that economic conditions had deteriorated over the past few weeks.