07-04-2008
Interest rate cut expected
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There is a significant chance that interest rates will be cut when the Bank of England's monetary policy committee (MPC) meets this week, it has emerged.
Reports have confirmed the expectation of experts that the MPC will reduce interest rates in April by 0.25 per cent, bringing rates down to five per cent.
"We believe that the increased downside risks to growth stemming from tighter credit conditions … will lead the MPC to cut interest rates from 5.25 per cent to five per cent on Thursday," said Howard Archer, the chief economist at Global Insight.
Mr Archer confirmed his belief that the interest rate reduction will come in the face of existing pressures from inflation.
At present, the UK has an inflation rate of 2.5 per cent, which is higher than the Bank of England's stated target of two per cent.
Inflation data will next be announced by the Bank on April 15th.