The Bank of England is unlikely to bring the base rate of interest below 0.5 per cent, it has been suggested.
A decision on the rate is due next week, with the Bank's monetary policy committee (MPC) having brought it down to one per cent this month.
Such a decision can lead to cheaper payments for those with secured loans, but Trevor Williams, economist at Lloyds TSB, predicted that it will not fall much further.
"I think half a per cent is about as low as the authorities are likely to go," he remarked, adding that a "co-ordinated effort" can now be expected to be used, with other policies playing a role in boosting the economy.
According to Mr Williams, bringing the rate below 0.5 per cent would be difficult "without damaging the way the money markets operate".
Minutes of the MPC's most recent meeting revealed that all nine members were in favour of a reduction.
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