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Bank 'will cut rate in January'

Bank 'will cut rate in January'

Category: Loans

Updated: 24/12/2008
First Published: 19/12/2008

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The Bank of England has been predicted to introduce further base rate cuts at its next monetary policy committee (MPC) meeting.

Earlier this month the MPC reduced the official rate by 100 basis points to two per cent, but Ernst & Young has noted that a larger change was considered.

As a result, the firm has suggested that another one per cent cut will come in January, something that could lead to lower rates for secured loans.

The Ernst & Young Independent Treasury Economic Model (Item) Club made the prediction after the MPC minutes showed that the decision had been unanimous.

Senior economic advisor to the group Hetal Mehta said that further cuts are "likely, unless the MPC [sees] clear evidence that the severity of the recession is easing".

Should any more reductions be implemented, the base rate would reach its lowest point in the Bank's 314-year history.

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