Will The Bank of England Cut Interest Rates?
In what Global Insight’s Howard Archer considers “one of the tightest calls ever,” speculations abound as to whether or not the Bank of England will decide to cut interest rates today during the Monetary Policy Committee’s monthly meeting.
Those who claim the Bank of England will cut rates point towards the credit crisis as their main reasoning. The chain of effects resulting from the sub-prime mortgage collapse, with banks increasing their lending rates and consumers suffering, has prompted the Bank of England to hold rates steady since July 2007 after increasing it five times since August 2006. These analysts claim that the Bank of England will cut rates to 5.5%, from its current 5.75%.
Explaining the debate the Monetary Policy Committee must have, Reuters states that the committee must balance a “sharp economic slowdown against rising price pressures”.