Wednesday 3rd October 2007
The Bank of England may opt to lower the base rate of interest in the run-up to Christmas, according to an industry analyst.
Howard Archer, chief UK and European economist at Global Insight, argues that "the dominant question is: Could the Bank of England cut interest rates before the end of the year?".
Some industry practitioners have called for the first decrease to occur at this months meeting, due to take place on Thursday, October 4th, he notes.
But Mr Archer predicts that the monetary policy committee (MPC) will "remain wary" about acting too soon to ease pressure on the financial markets.
Meanwhile, long-term estimates from Capital Economics predict an interest rate of about five per cent by the end of 2008.
The firm ascribes an overall slowing in economic activity to the effect of the full percentage point elevation in the base rate effected by the MPC since November 2006.
"Indicators suggest that the market turmoil has continued to fade - but conditions have not yet returned to normal," the companys October 2007 UK Economics Chart Book comments.
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