Financial news categories
Financial news archive
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
BoE will 'slowly lower rates to 4%'
28 February 2008
The staggered drop in the Bank of England base interest rate may suggest that they will drop as far as four per cent, according to experts.
Economists at Capital Economics believe that the base rate, which helps set savings and debt rates could fall as low as four per cent as the Monetary Policy Committee (MPC) tries to combat the effects of the credit crunch.
Next Thursday, when the MPC meets again, they are unlikely to "slash rates in the style of the Fed [the US central bank]", according to Paul Dales of the economic research consultancy.
He said: "We see rates going down to around four per cent. But we don't think they'll get there any time soon, which will play a part in how low rates have to go."
The MPC faces a dilemma, said Mr Dales because on the one hand it wants to stimulate the economy, but it also feels the need to rein back inflation, which has been growing recently.
He added: "They may be able to get away with lowering rates to something like 4.5 per cent or something slightly stimulatory, but because we think they're going to take their time due to inflation concerns, rates might actually have to fall further to around 4 per cent."
A Reuters survey revealed that 49 of 62 economists it polled expected the MPC to next cut rates in May.
