Base rate will be cut to 5%, say economists

Next week’s monetary policy committee (MPC) meeting will result in a cut of 0.25 per cent, according to economists.

The Bank of England base rate currently stands at 5.25 per cent. The MPC is to announce its decision at noon on April 10th following two days of consultation.

An Adfero poll of major financial institutions resulted in six out of eight predicting a cut to five per cent and the remaining two claiming the MPC will delay until May.

Jeavon Lolya, senior economist at Lloyds TSB, explained that the committee may put off making a reduction until May’s inflation report is published.

However, Howard Archer, UK chief economist at Global Insight, stated: “We believe that the increasing downside risks to UK growth stemming from tight credit conditions will prompt the Bank of England to trim interest rates.”

Mr Archer also predicted that the base rate could be cut to four per cent by the first half of 2009.

© Adfero Ltd

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