INSTANT VIEW 11-Bank cuts interest rates to 5 percent

LONDON (Reuters) - The Bank of England cut interest rates by 25 basis points to 5 percent as expected on Thursday.

Following are reactions from business groups and economists to the decision.

LENA KOMILEVA, TULLETT PREBON

"Today's BoE rate cut represents an important step in the policy strategy towards the financial turmoil. However its significance for borrowers, both investors and consumers, is for the most part symbolical since at 5% the Bank Rate remains restrictive on both the structural and cyclical analysis, given elevated term lending rates and a deteriorating growth outlook, despite two more rate cuts priced in the money market.

"Unsurprisingly the policy statement accompanying the rate cut disclosed little on the outlook and focus will be on next month's Inflation Report for guidance on the future path of the policy rate. However, the statement signalled a significant psychological shift in the Bank's thinking about the link between the credit crunch and the real economy, which is a sign of further monetary easing in the pipeline.

"The MPC's language sounded dovish enough to maintain investor expectations about possible back-to-back rate cuts. This shifts focus onto the MPC minutes out on 23 April as investors will be looking for any possible dissenters in favour of a more aggressive 50bps rate cut this month."

ANDREW SMITH, KPMG

"The MPC has decided that the downside risks to growth - and the consequences of underestimating them - outweigh to upside risks to inflation.

"However, the medicine may not get through to the patient. Even if money market rates fall in tandem, which is questionable, the cut may not be reflected in mortgage and commercial loan rates as lenders seek to expand margins and reduce credit supply.