The first reduction in the repo rate was only made in June 2003, but there were already clear signs that the inflation rate was moving towards the inflation target at the March meeting of the Monetary Policy Committee. At the time of that meeting it was felt that upside risks limited any possible actions that the MPC could take.
In particular, the commencement of the war in Iraq on the first day of the meeting had an important effect on the Committee's decision. As the uncertainties about the inflation outlook dissipated and it became increasingly apparent that most factors favoured the attainment of the inflation target in the next two years, the MPC started to lower interest rates.