1 Feb

Bank will cut rates "gradually and steadily"

Bank will cut rates "gradually and steadily"

The base rate of interest will come down "gradually and steadily" this year, a leading economist has predicted.

This Thursday the Bank of England is due to meet to decide the direction of interest rates amid calls for cut by a 0.5 per cent from the retail sector.

However, lobbying from retailers for such a move is set to be ignored by the bank which will exercise caution and shave off 0.25 per cent instead as it seeks to support growth while containing inflation, Howard Archer, chief European economist of Global Insight, predicts.

He said: "Despite calls for a 50 basis point reduction, we expect the Bank of England to trim interest rates by 25 basis points to 5.25 per cent next Thursday."

Only significantly worse than expected economic indicators could prompt the bank to cut rates by more than this margin, according to Mr Archer.

"We suspect that only a further very sharp fall in equity prices next week and last minute data indicating that the UK growth outlook has started to deteriorate sharply could possibly prompt a 50 basis point cut," he said.

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