Interest rates predicted to fall
News Category: Industry News
Published: 07-Apr-2008
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The Bank of England is likely to reduce interest rates from 5.25 per cent to 4.5 per cent by the beginning of 2009, an expert has suggested.
An economist with the Royal Bank of Scotland has pointed out that Bank of England governor Mervyn King has already signaled that Britain is facing tough economic conditions and further rate cuts.
Ross Walker, a global economist, stated: "We expect a further quarter-point cut to follow in the summer (July or August), before the expected peak in CPI inflation this autumn induces a hiatus ahead of a final 25bp reduction to 4.5 per cent in Q1 2009."
Buy-to-let landlords will welcome a fall in interest rates, as it could signal lower mortgage rates and ease the current credit squeeze in Britain. Prime minister Gordon Brown warned last week that the world is currently facing "the first truly global financial crisis" and has called for urgentmeasures to address the problem.
The Bank of England's rate-setting monetary policy committee (MPC) is facing pressure to reduce interest rates in order to kick-start the economy amid signs of a slowdown. Due this Thursday, analysts will be watching the results of the MPC's latest rate-setting meeting closely.
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