MPC may wait until June

Published: May 02, 2008

It looks as though the Bank of England will be cautious when it comes to cutting interest rates in the coming months.

A new poll of nine of the UK's major financial institutions shows that they believe that rates will not be cut in May.

However, the majority also believe that a cut will be announced in June, spelling good news for people keen to see their mortgage interest rates reduced.

A number of respondents failed to completely rule out a reduction in May, with the Centre for Economics and Business Research saying there is a 30 per cent chance of a reduction this month.

Simon Hayes, UK economist at Barclays Capital, said that there is likely to be a reduction next month or the month after.

"We haven't had such bad news on economic activity to justify a cut this month," he explained.

"But I do think they will cut next month or certainly within the next two months though," added Mr Hayes.

The Bank of England's Monetary PolicyCommittee is due to meet on May 8th and borrowers will be watching closely to see if their mortgage interest rates will be cut.