Base rate to be cut 3 times in new year

The base rate of interest will be cut at least three times in 2008, according to one expert.

Global Insight economist Howard Archer believes that the Bank of England will announce at least three cuts in the new year.

It follows the publication of the minutes from the latest Monetary Policy Committee (MPC) meeting.

Only two members voted in favour of cutting rates in November so a December cut looks unlikely, but Mr Archer is confident that mortgage borrowers will receive a triple boost in 2008.

"Given that the MPC believes that some slowdown in growth is necessary to dilute underlying inflationary pressures, a majority of MPC members will probably want to see clear evidence of a significant slowdown before sanctioning a rate cut," he said.

"Whether or not the MPC acts in December or waits until early 2008, we now expect the Bank of England to trim interest rates three times by the third quarter of 2008, taking them down from 5.75 per cent to 5.00 per cent," added Mr Archer.

The base rate of interest hit a six-year high of 5.75 per cent in July 2007 as a result of five increases in 11 months.

Related Articles