Expert predicts aggressive rate cuts next year

Thu, 28 Aug 2008

The Bank of England will not cut its base interest rate in the coming months due to inflationary pressures, one expert has asserted.

According to Capital Economics' chief European economist Jonathan Loynes, the current interest rate of five per cent is likely to be held until inflationary problems are out of the way, but then he predicts the Bank will act "aggressively".

Mr Loynes anticipates that the first rate cut may come in November this year.

He notes that a rate cut of 1.5 per cent, taking the base rate to 3.5 per cent, may even be possible in 2009.

"Once these concerns about inflation are finally out the way then they will want to bring interest rates down pretty quickly in order to limit the severity of the economic downturn," Mr Loynes added.

Meanwhile, earlier this week the Bank's deputy governor Charles Bean warned that the UK economy is facing a "challenging" time.
add to favouritesnewsletterlink to this pagesend to friendpost comments

Link to this page

Copy and Paste the following HTML into your page.