04-03-2008
Investor expects interest rate cut
News by Adfero for Simply Business - independent providers of public liability insurance, business finance, landlord insurance, buy-to-let mortgages & commercial mortgages.
With the Bank of England due to deliver its decision on interest rates this week, businesses have been advised to expect another cut.
The monetary policy committee meets on the first Thursday of every month to reveal its decision on the base rate - and New Star predicts a fall.
Last week, the company forecast that a cut would be put back to April amid expectations of near-term inflationary pressures - but it has now revised its forecast.
"Credit market conditions have […] deteriorated further since its last meeting, suggesting greater downside risks to the economy and a possible inflation undershoot over the medium term," said Simon Ward, economist at New Star.
Interest rates have been shaved by 0.25 per cent in the past two consecutive months. The drops came after several hikes last year.
Various other commentators - including Global Insight's Howard Archer and Capital Economics' Paul Dales - believe the rate will stay the same this month.