Finance industry predicts MPC will cut base rate

The Bank of England will cut the base rate by 25 basis points next week, industry experts have forecast.

In a poll of major financial institutions including Lloyds TSB, RBS and Barclays Capital, 100 per cent of respondents thought that the monetary policy committee (MPC) would opt for a 5.25 per cent rate.

Howard Archer, UK chief economist at Global Insight, said that there have been calls for a 50 basis point reduction.

“We suspect that only a further very sharp fall in equity prices next week and last minute data indicating that the UK growth outlook has started to deteriorate sharply could possibly prompt a 50 basis point cut,” he explained.

Following a 25 basis point reduction in December, the MPC opted to maintain the 5.5 per cent rate in January, leaving the industry to speculate that it was awaiting further news on inflation.

© Adfero Ltd

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