Global Insight: Bank won’t cut base interest rate

Posted 2008-05-28

An economist has predicted that the Bank of England will keep the base interest rate unchanged at five per cent next week.

Howard Archer, chief European and UK economist for Global Insight, states that the Bank will "tread extremely carefully on the interest rate path for the time being", in a bid to keep inflation stable.

However, he added that rates could drop as low as four per cent in 2009, with cuts beginning this August "at the very earliest".

"It will be a gradual process," he continued.

The next interest rate announcement will be made on Thursday June 5th.

This news could come as a blow to mortgage buyers who will have been hoping that the bank and lenders would cut interest rates.

Since December last year, the Banks Monetary Policy Committee has cut the base interest rate three times, lowering it by three-quarters of a percentage point in total.

This follows news that the number of mortgage approvals for April fell by 40 per cent compared to last year, according to British Bankers Association figures.



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