Lower interest rates with slower cuts

Tuesday, February 12, 2008

The slower the Bank of England cut interest rates the more likely rates will fall further.

There is a feeling that interest rates could eventually go down to 4% but would take a while to reach this figure.

Many people would hope rates would fall faster but a prudent wait and see approach by the Bank would be more likely, especially with the backdrop of infaltion.

The markets are of the opinion that the slower the Monetary Policy Committee (MPC) cuts interest rates the further interest rates will fall.

The figure of 4% is plausible for around June next year as inflation poses a near term threat.

Uk interest rates are currently 5.25%.

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