Financial News

• Brown dismisses housing crisis fears (09 04 2008 10:15)
• Mortgage hope offered by bank (09 04 2008 10:15)
• Consumer morale 'falls again' (09 04 2008 10:15)
• Bristol & West withdraws deals (09 04 2008 10:15)
• Retirees feel 'unhappy due to no longer working' (09 04 2008 10:15)
• Severn Trent to be fined £36m (08 04 2008 04:15)
• Brown to announce first time buyers help (08 04 2008 04:15)
• UK bank details 'for sale by thieves' (08 04 2008 04:15)
• Last 100% mortgage to disappear (08 04 2008 04:15)
• High earners 'shut out of market' (08 04 2008 04:15)

Subscribe!

Don't bank on rate cuts, poll suggests

Bank of England interest rate cuts will be conservative across 2008, borrowers have been warned.

fairinvestment.co.uk said yesterday that more people think that the rate will fall half a percentage point to 4.75 per cent by the end of the year than those that predict a 0.75 per cent cut.

Last summer's financial crisis has resulted in an ongoing credit crunch, with banks becoming much less willing to lend to each other - and several studies have suggested that the economy has slowed as a result.

Normally, this would result in significant cuts to interest rates - in order to encourage more people to borrow on credit through home loans or personal loans.

However, the Bank has only cut the rate by half a percentage point since the summer, due in part to concerns about rising inflation.

This contrasts markedly with the response to the credit crunch of the Federal Reserve, which sets the rate in the US.

The organisation has slashed rates by well over a point since last summer - and single rate cuts have hit 0.75 per cent at one point.

Director at fairinvestment.co.uk James Caldwell commented: "[The] decision is not as straightforward as people might think when it comes to setting the base rate.

"Inflation must be taken into consideration, as must the country's general economic condition."

Send this article to: