Rate cut is on the cards

Published: May 01, 2008

It is very likely that the Bank of England will cut the base rate of interest sooner rather than later.

Global Insight has said that the Bank is coming under increasing pressure to reduce rates.

It will be good news for borrowers if the reductions lead to cuts in mortgage interest rates.

According to Howard Archer, chief European and UK economist, a rate cut could be introduced in May, although he expects that it will not be introduced until June.

People keen to see their mortgage interest rates fall will be hoping that the Bank acts next week rather waiting one more month.

"An interest rate cut from five per cent to 4.75 per cent is certainly possible at the Bank of England's [meeting] next Thursday, but we suspect that most MPC members would prefer to delay acting until June given current elevated inflation risks," commented Mr Archer.

"However, further weak data next week could yet trigger an interest rate cut on Thursday," he continued.