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Economist Predicts Another Interest Rate Cut From the Bank of England

Economist Predicts Another Interest Rate Cut From the Bank of England A LEADING economist has predicted that the Bank of England will cut the base rate of interest by another quarter of a per cent over the next two months.

Global Insight's chief European and UK economist Howard Archer said that the Bank’s monetary policy committee (MPC) will reduce the base rate by 0.25 per cent in the near future after analysing the latest data from across the British economy, such as the embattled property market.

A fourth interest rate cut since December 2007 - the base rate currently stands at 5 per cent - could be passed on to borrowers in the form of cheaper mortgages.

Mr Archer said that the cut was likely to take place in June, although he would not rule out the possibility of it taking place a month earlier.

He said: "We suspect that most MPC members would prefer to delay acting until June given current elevated inflation risks.

"However, further weak data next week could yet trigger an interest rate cut on Thursday."

Over the past few months, the MPC has alternatively made quarter per cent cuts to the base rate of interest and held it steady. Its cuts occurred in December 2007, February 2008 and April this year.

The Bank hardly ever makes changes to the interest rate over successive months. The MPC has not taken such action since May and June 2004, when it increased the base rate.

Debt Management News posted on 08 May 2008

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