MPC expected to cut the base rate of interest

Posted: 01 Feb 2008 11:16:27 GMT

The vast majority of financial analysts expect the Bank of England's Monetary Policy Committee (MPC) to announce a cut to the base rate of interest in February.

The vast majority of financial analysts expect the Bank of England's Monetary Policy Committee (MPC) to announce a cut to the base rate of interest in February.

It would follow the December cut, which brought interest rates down to 5.5 per cent.

A poll of seven of the UK's major financial institutes, including Lloyds TSB, Barclays Capital and RBS, revealed that all of those questioned anticipate seeing a cut.

In addition, all are confident that the MPC will announce a cut of 0.25 percentage points.

Howard Archer, economist at Global Insight, has failed to completely rule out a larger reduction but did say that it is unlikely.

"Despite calls for a 50 basis point reduction… we expect the Bank of England to trim interest rates by 25 basis points to 5.25 per cent next Thursday," he revealed.

"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," continued Mr Archer.

The MPC's decision will be announced following its meeting on February 7th.

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