At its monthly meeting in London today (December 6th), the MPC voted to reduce the base rate of interest attached to personal loans, credit cards and other borrowing products by a quarter percentage point to 5.5 per cent. This is the first time that the committee has cut rates since July 2005. According to the body, the decision was taken due to slowing economic growth, deterioration in the wider financial markets and a tightening in the supply of loans and other types of credit to both households and businesses. However, as a result of the announcement, a number of consumers could find that pressure on their spending will lessen during the coming months as charges on borrowing such as personal loans fall.

Meanwhile, the Bank reported that inflation on the consumer price index stood at 2.1 per cent over the course of October. It was suggested that increased food and energy prices are set to keep inflationary levels above target in the coming months, which in turn could impact upon people's ability to service other areas of their finances such as loans, mortgages and credit cards.

Commenting on the MPC decision, Simon Rubinsohn, chief economist for the Royal Institution of Chartered Surveyors (Rics), said: "Today's rate cut will provide some much needed relief for the 1.4 million homeowners who are due to refinance their mortgages over the next year or so. Higher money market rates resulting from the credit crunch threatened to lift the monthly out-goings for many of these borrowers which in turn could further crimp consumer spending during the course of 2008."

However, the Rics economist added that although it would be wrong for homeowners to "ignore the inflation risk", many people should be able to cope with "the sharp jump in food and oil prices". Mr Rubinsohn added that the institution expects the MPC to cut rates again in the early stages of 2008.

Stephen Leonard, director of mortgages for Alliance & Leicester, added that today's decision "is excellent news" for all homeowners, especially those who are due to find their short-term fixed-rate deals are set to expire. As a result of the move, consumers may find that their ability to make payments on mortgages, loans and other commitments is not under as much pressure following the Bank's previous moves to increase the base rate five times since August 2006.

The director added that such moves could also help prospective first-time buyers to get on to the property ladder as mortgages will become more affordable. He said: "Having enjoyed historically low fixed rates, this move to reduce the cost of borrowing will be a welcome one."

As a result of today's decrease, now could be an ideal time for those consumers who are currently struggling to handle their finances to apply for a loan. In taking out a personal loan, many people may find that it helps them to manage their money. According to Lloyds TSB's recent consumer barometer, a record 73 per cent of Britons believe that, in general, costs have increased over the last 12 months. Rises in mortgage payments, food prices and utility bills were reported to have taken place over the course of this year, with a cheap loan being one possible way to meet such expenses in the coming months.