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Base rate cut expected, poll finds

Base rate cut expected, poll finds

Category: Mortgages

Updated: 03/02/2009
First Published: 03/02/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Bank of England's monetary policy committee (MPC) is likely to cut the base rate further this week, experts have predicted.

An Adfero poll of economists, financial institutions and business organisations revealed that 11 out of 12 expect a reduction, with one voting for a hold.

The majority of forecasts were for a cut of 0.5 per cent, which would bring the rate to one per cent and could make interest payments cheaper for secured loans holders.

UK chief economist for Global Insight Howard Archer noted that weak lending activity and the fact that the economy contracted more sharply than expected in the final quarter of the year could contribute to the decision.

And Charles Davis, senior economist at the centre for economics and business research, remarked: "I'd say [a cut of] 50 basis points is probably the most likely decision. They could even go with something even bigger."

Last month eight of the nine MPC members voted for a 0.5 per cent reduction, with David Blanchflower preferring a slash of a one per cent.

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