The Bank of England's monetary policy committee has announced that the base rate has been reduced to five per cent.

A 0.25 per cent cut was deemed necessary in relation to the medium term target of two per cent CPI inflation, the committee stated.

Increasing to 2.5 per cent during February, inflation reflects continuing hikes in energy and food prices and the depreciation of sterling on import costs, it explained.

However, a number of industry experts have expressed concern that a quarter point cut is not enough in the current financial climate.

"This was a good opportunity to finally take the gloves off and knock at least a half point off the base rate, which would have had a more substantial effect," said Andrew Montlake, a partner at mortgage brokers Cobalt Capital.

For those mortgage customers who are not already on a Bank of England tracker rate, the base rate cut will not be reflected in their rates, he explained, claiming that it may only offset recent increases in the markets.

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