Hope for interest rate cut this week
The Bank of England is to face its most crucial interest rate decision in 11 years this week as a survey shows business confidence collapsing and bankers warn of a further squeeze on homebuyers
A new survey of major UK financial institutions has discovered that 75% believe interest rates will be cut by 25 basis points to 5%. The base rate of interest currently stands at 5.25% after reductions in December and February.
The British Chambers of Commerce economic survey, due this week, will emphasise increasing fears among British firms, while the property market will face a further battering as more banks are expected to tighten their mortgage terms or scrap loan deals altogether.
Howard Archer of Global Insight said that it is very difficult to know which way the Bank of England will go. He believes that the increasing downside risks to UK growth stemming from tight credit conditions will prompt the Bank of England to cut interest rates, said Mr Archer.
The Bank of England’s Monetary Policy Committee are due to meet on Thursday.