February rate cut still on the cards

Posted: 15 Jan 2008 12:16:31 GMT


            Property News - February rate cut still on the cards

Mortgage borrowers look as though they are still set to benefit from a February cut to the base rate of interest.

Mortgage borrowers look as though they are still set to benefit from a February cut to the base rate of interest.

That is according to Howard Archer from Global Insight, who commented following the publication of December's consumer price inflation (CPI) report.

The latest figures from the Bank of England show that CPI remained stable in December, standing at 2.1 per cent, just above the two per cent target.

"The stabilisation in consumer price inflation in December keeps a February interest rate cut by the Bank of England very much on the cards, and we expect rates to be trimmed from 5.5 per cent to 5.25 per cent then," said Mr Archer.

"The pace and extent of further interest rate cuts by the Bank of England will… depend critically on underlying inflationary pressures being contained by ongoing wage moderation and by companies' pricing power being diluted by slowing growth.

"We believe that this will happen, and that interest rates will be down to 4.50 per cent by the end of this year," he continued.

The rising cost of food was countered by the December 0.25 percentage point cut to the base rate of interest.

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