Leading article: A small boost for a faltering economy

As it is, there are plenty, and not only among the unions, who would regard the 0.25 per cent reduction as the absolute minimum required. As a gesture, it is undoubtedly important. The first fall in rates for two years reassures the market that the Bank is concerned about the growing signs of a slowdown in the economy and a falling back in house prices. As an actual move, it is probably too slight to turn the economy back to accelerating growth or to do very much to the housing market.

It's not meant to, of course, which is where the continuing uncertainty lies. After nearly a decade of continuous growth, the British economy is beginning to falter, but in an uneven way. The growth that exists is coming largely from consumer sales, high property prices and high public spending. Strip those back from the top of the pot and you are looking at an economy in which manufacturing is struggling, the exchange rate is too high for the export industries, and savings are down. Employment, buoyed by the expansion of the public sector, is much less sure in the private sector. Inflation, despite the recent fall in sales, is edging up again.

For the monetary men of the Bank of England, this pattern is sending out contradictory signals. On the one hand, the recent signs of a slowdown in consumer sales and house prices suggest that a boost is needed if the economy is not to edge towards recession. On the other, the high employment and most recent prices index imply that inflation is a matter of continuing concern and that the Bank would be unwise to take risks with it by too rapid a reduction in rates.

So - as so often before - we remain in something of a limbo where the Bank of England will take its interest rate decision one step at a time, prepared to move forward, stay still or reverse at each stage. If inflation is your primary concern - as it is the Bank's - this makes sense. If a slowing economy is the worry, then it may prove far too cumbersome. The Bank, by taking this minimum step, has given itself some months to look at the figures and decide which of the various factors concern it most. It will need to act fast, however, if the economy really is turning.