Bank of England chief hints at cut in base rate

Mervyn King, the governor of the Bank of England, has indicated that an interest rate cut is in the pipeline, meaning that mortgage interest rates are also likely to go down.

Discussing the Bank of England's February inflation report before the Treasury select committee, Mr King acknowledged the tightening of lending conditions made cuts more likely despite the need to control inflation, which currently stands above the central bank's two percent target and is likely to rise further to around three per cent.

"We set interest rates to meet our inflation target and we are on track. There are big risks on either side, if the evidence moves more in favour of one set of risks than another then we will respond," Mr King expanded.

Earlier this month, the Monetary Policy Committee voted to keep interest rates on hold at 5.25 per cent.

Mr King told MPs their task was a "difficult balancing act".

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