Friday 4th April 2008
April could see a reduction in the base rate to five per cent, it has been suggested.
Howard Archer, chief UK and European economist at Global Insight, observes "downside risks" to the economy which could spur the Bank of England into action.
Tightened credit conditions are put forward by the economist as a likely factor which could necessitate such a move.
As a result, he forecasts a quarter percentage point cut in the base rate on Thursday, when the monetary policy committee announces its decision.
"However, it is an extremely close call, given that inflation risks currently remain elevated," Mr Archer comments.
"Further out, we expect interest rates to fall to a low of four per cent in the first half of 2009."
The committee last month maintained the base rate at its current level of 5.25 per cent following quarter-point reductions in February and an equivalent cut in December 2007.
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