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Interest rate poll predicts cut

The Bank of England is likely to cut the base rate of interest by 0.25 per cent next week, a majority of economists have agreed.

In a new poll of eight top analysts, six agreed that the reduction would be administered when the Bank's Monetary Policy Committee meets.

This would mean that the new rate would stand at five per cent, 0.75 per cent down over last summer's high.

Concerns over an apparently slowing economy could lead the bank to cut, as many unsecured loan and mortgage loan repayment rates would be reduced by the move - encouraging consumers to borrow.

Predicting a reduction, chief economist at Global Insight, Howard Archer, said: "We believe that the increasing downside risks to UK growth stemming from tight credit conditions will prompt the Bank of England to trim interest rates."

However, economists at HSBC and Lloyds said that rates would remain as they were due to concerns over inflation.

"The data suggests that interest rates are likely to be cut in coming months. It's just a close call between whether that’s done in April or May," senior economist at Lloyds TSB Jeavon Lolay said.

"With May we just feel it's slightly more favourable, because it's timed with the Bank of England's latest inflation report."

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