2 Oct

MPC 'has scope for rate cut'

MPC 'has scope for rate cut'

The Bank of England's monetary policy committee (MPC) has more scope to cut interest rates next week after the publication of further evidence to show that Britain's economy is slowing, an economist has said.

Simon Hayes of Barclays Capital told the Financial Times that recent news - such as figures from the Chartered Institute of Purchasing and Supply/Markit purchasing managers' index showing a further drop in manufacturing output - will make it "relatively easy for the MPC to sell a rate cut as being consistent with hitting the inflation target in the medium term, even as inflation hits five per cent".

Mr Hayes has now forecast a rate cut, something former cabinet minister John Redwood called for this week at a Conservative Party conference fringe meeting.

A reduction in the base rate could mean cheaper mortgages for those looking to get on the housing ladder.

The September MPC meeting saw it vote by eight to one to hold the base rate at five per cent.

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