Base rate cut expected

Posted: 04 Apr 2008 12:09:02 GMT

Mortgage borrowers are hoping that the base rate of interest will be cut this month and it seems that their wishes may come true.

Mortgage borrowers are hoping that the base rate of interest will be cut this month and it seems that their wishes may come true.

A new survey of major UK financial institutions has found that 75 per cent believe interest rates will be cut.

It follows March's rate freeze, which came after reductions in December and February.

The base rate of interest currently stands at 5.25 per cent and most institutions said that they anticipate seeing a 0.25 percentage point cut.

Howard Archer from Global Insight said that it is very difficult to know which way the Bank of England will go.

"We believe that the increasing downside risks to UK growth stemming from tight credit conditions will prompt the Bank of England to trim interest rates by a further 25 basis points to five per cent at its April meeting," he commented.

"However, it is an extremely close call, given that inflation risks currently remain elevated. Further out, we expect interest rates to fall to a low of four per cent in the first half of 2009," added Mr Archer.

A decision is due to be announced on April 10th.

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