Base rate decision hangs in the balance

Posted: 09 Jan 2008 10:26:06 GMT

It is unclear whether or not the Bank of England's Monetary Policy Committee (MPC) will cut the base rate of interest tomorrow (January 10th).

It is unclear whether or not the Bank of England's Monetary Policy Committee (MPC) will cut the base rate of interest tomorrow (January 10th).

Industry figure remain undecided about which way the MPC will vote, with one analyst describing it as a "very difficult call".

Howard Archer from Global Insight said that January's decision is "balanced on a knife edge" and, although he predicted that rates would remain unchanged until February, he added: "We certainly would not be shocked if the MPC did cut rates on Thursday."

Barclays Stockbrokers also believes that a rate cut will be announced in February but forecasts a January reduction as well.

"The pressure has been building and building on the Bank of England to cut interest rates this week," commented Henk Potts, investment analyst at the firm.

"We expect a quarter-point cut on Thursday and further quarter-point cuts in February and April, taking interest rates back to 4.75 per cent," he continued.

December's 0.25 percentage point cut was the first for over two years.

© Houseladder Ltd