MPC minutes suggest further rate cuts

Published: February 20, 2008

It appears that mortgage interest rates could be set to fall further in the coming months.

The Bank of England's Monetary Policy Committee (MPC) has published the minutes from its latest meeting.

They reveal that all nine MPC members voted in favour of a 0.25 percentage point cut in the month – the second in three months since December.

One member even pushed for a larger reduction of 0.5 percentage points.

The information included in the minutes has fuelled speculation that further rate cuts are on their way, however, Global Insight economist Howard Archer believes that mortgage borrowers will have to wait a couple of months at least.

"We expect the Bank of England to trim interest rates by a further 25 basis points to five per cent in April or May, with the exact timing depending critically on just how weak the economic data is over the coming weeks and whether or not inflation expectations appear to be at least stabilising," he said.

"Further out, we still expect interest rates to be down to 4.5 per cent by the end of the year and believe that they will fall to four per cent in the first half of 2009, despite the Bank of England's February Quarterly Inflation Report indicating that further monetary policy easing is likely to be limited," concluded Mr Archer.

The base rate of interest fell from 5.75 per cent to 5.25 per cent between December and February.