March rate cut may happen

Mortgage borrowers may be boosted by a cut to the base rate of interest in March after all.

That is according to New Star, which has published a report which appears to support an interest rate reduction sooner rather than later.

The New Star MPC-ometer, which is based on 13 economic and financial indicators, suggested an April rate cut just one week ago.

However, the firm claims that more recent economic data has changed the outlook, with a suggestion that the MPC (Monetary Policy Committee) members will vote 5-4 in favour of a March reduction.

"The last Inflation Report indicated that the MPC expected to cut interest rates but was inclined to be cautious because of near-term inflationary pressures," said Simon Ward, economist at New Star.

"Credit market conditions have, however, deteriorated further since its last meeting, suggesting greater downside risks to the economy and a possible inflation undershoot over the medium term," he added.

The majority of analysts have predicted that the base rate will be frozen in March.

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