Analyst predicts delayed interest rate cut

Thu, 09 Mar 2006

A leading financial analyst is predicting that the UK will not see interest rates cut before August.

John Butler, chief economist at HSBC, says that interest rates are likely to remain stable for the next few months.

He believes the rate-setting monetary policy committee (MPC) of the Bank of England would not make any changes until late in summer.

The MPC is due to vote on the matter today.

It is the job of this committee to change the interest rate in a bid to keep the level of inflation as close as possible to the government's target of two per cent.

However, Mr Butler is convinced that the nine-member committee will keep the interest rate at its current level of 4.5 per cent.

"I still think that the cut is more likely in the long run," he says.

Mr Butler earlier predicted an interest rate cut for May, but he now believes this might be "a little premature".

If the interest rate cut comes in August as Mr Butler predicts, it would be a year since the last interest rate cut.

Last year's only change to the interest rate came in August, when the MPC voted for a 0.25 per cent reduction from 4.75 per cent.

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