Analysts predict base rate cut

It is widely expected that the base rate of interest will be cut next week.

The Bank of England's Monetary Policy Committee (MPC) is due to meet on February 7th and a new poll suggests that most of the major financial institutions believe a cut will be announced.

It comes after the surprise reduction in December and a not-so-surprising lack of movement in January.

Analysts have been predicting that rates would be reduced in February for weeks and this has been confirmed by Capital Economics, Global Insight, Lloyds TSB, RBS, Barclays Capital, Centre for Economic and Business Research and Moneywise.

In addition, all seven believe that a 0.25 percentage point cut is on the cards.

"Despite calls for a 50 basis point reduction… we expect the Bank of England to trim interest rates by 25 basis points to 5.25 per cent next Thursday," said Howard Archer from Global Insight.

"We suspect that only a further very sharp fall in equity prices next week and last minute data indicating that the UK growth outlook has started to deteriorate sharply could possibly prompt a 50 basis point cut," he added.

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