April rate cut on the cards

Posted: 18 Mar 2008 11:41:46 GMT

Mortgage borrowers and first-time buyers (FTBs) may be boosted by a cut to the base rate of interest in April.

Mortgage borrowers and first-time buyers (FTBs) may be boosted by a cut to the base rate of interest in April.

That is the opinion of Global Insight economist Howard Archer, who believes that the Bank of England's Monetary Policy Committee (MPC) may have to announce an interest rate reduction sooner rather than later.

Mr Archer is of the opinion that the MPC would rather wait until May before announcing a cut but feels that a lack of liquidity within the money markets may force its members to act earlier.

"There is now a very real possibility that the Bank could be forced into acting in April if liquidity remains very tight and money market interest rates elevated," he said.

"Significantly, Monetary Policy Committee members have highlighted that tight credit conditions pose a particularly serious downside risk to consumer spending, business investment and the housing market over the coming months," added Mr Archer.

The economist also believes that the base rate of interest will fall to just four per cent within the first six months of 2009.

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