3 Mar

Bank to trim base rate 'by another 0.5 per cent'

Bank to trim base rate 'by another 0.5 per cent'

The Bank of England's monetary policy committee (MPC) is likely to cut the base rate by another 0.5 per cent, it has been predicted.

Lloyds TSB economist Trevor Williams suggested that the MPC will reduce the rate from its current one per cent before resorting to other methods of monetary policy.

He argued that the rate will not fall below 0.5 per cent for practical reasons, explaining: "Money markets need a margin above to transact the cost of mortgage lending so I think half a per cent is about as low as the authorities are likely to go."

A further reduction of 0.5 per cent could help lower mortgage costs for first-time buyers.

The MPC will vote on the base rate tomorrow, having decided to cut it during each of its last five meetings.

Before the recent run of reductions began in October 2008 the figure stood at five per cent.

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