One quarter of one percent isn’t really that much, is it? Not when you compare yesterday’s Bank of England rate cut to the more aggressive measures taken by our cousins at the US Federal Reserve in recent months.

That seems to be the view of many this morning. Why didn’t the Bank’s Monetary Policy Committee (MPC) go further?

Those who hoped they would had their woes compounded yesterday. Signs are that the cut, already small, won’t be much felt by consumers. Nationwide, Royal Bank of Scotland, Alliance and Leicester and Britannia actually raised their rates yesterday.

So, in light of the fact that appears to have achieved little, was yesterday’s decision the right one? Should the MPC have gone further? Or (controversial), should it have stuck to its inflation-fighting mandate and left rates on hold? After all, the Consumer Price Index (CPI), the measure of inflation against which the MPC is judged, rose by 2.5% in February. That’s half a percentage point above the MPC’s inflation target of 2%.

I think the MPC fudged it. It made a decision based on fighting recession, not inflation. But it couched that decision in language that makes a weak attempt to tie it to inflationary concerns.

“Credit conditions have tightened and the availability of credit appears to be worsening,” said an MPC statement yesterday. The MPC also added that the slowdown in the economy will create spare capacity and ease inflationary pressures.

Of course, it’s easy to sit on the sidelines and carp. The MPC had a very tricky call to make yesterday. But by straying from its core objective, it has ensured its credibility has taken a hit. That’s likely to mean even trickier decisions in the months ahead.

Retail market “ugly”, Sir Philip Green says

One person not impressed by the MPC’s move is fashion magnate Sir Philip Green. The Kate Moss groupie gave a profit warning for his BHS chain yesterday, and predicts a shake-out in the retail market, which he describes as “ugly.”

The whole sector worries Green, and he sees little chance that yesterday’s rate cut would revive demand and predicted that the “very challenging” conditions would sort out good retailers from bad.

Green stopped short of calling time on any of his retail rivals, though.

Highly Recommended

—A SPECIAL FLEET STREET LETTER ALERT—

‘Assault on the Square Mile’

The finance sector makes up one third of Britain’s economic output.

It contributes £20 billion to the trade balance… and accounted for nearly HALF of UK GDP growth in 2007.

Let me ask you…

What do you think would happen to the domestic economy – and to YOUR savings and investments – if Britain’s ‘Miracle Money Machine’ had its output slashed by one tenth… one third… or even half?

Batten down the hatches, dear Reader, because you’re about to find out.

Below you’ll find the link to a brand new Crisis Report published by The Fleet Street Letter.

They’ve also identified three stocks poised to benefit from the finance sector-led recession they believe has to kick off in 2008.

Go here for the full report.

Forecasts are not a reliable indicator of future results. Your capital is at risk when you invest in shares, never risk more than you can afford to lose. Please seek independent financial advice if necessary. Fleet Street Publications Ltd. Customer Services: 0207 633 3600.

If there’s one thing the market can’t stand, it’s profit warnings. To us, the domestic retail sector looks as ugly as Green says.

The US has plenty of money — but not enough to buy with it…

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