Abacus Daily Debt News

Poll reveals base rate cut expectation

The base rate of interest is likely to be cut when the Bank of England’s monetary policy committee (MPC) makes an announcement on the issue tomorrow, according to the results of a new poll.

Of the 13 economists, financial institutions and business organisations questioned on the matter by Adfero, all expect the MPC to implement a cut.

Predictions for the reduction ranged from 50 to 100 percentage points, with chief economist at Lloyds TSB forecasting a one per cent cut, despite admitting that most are expecting a more modest reduction of 0.5 per cent.

"I think if they want to remain ahead of where markets are looking for and maybe get to where they want to be quicker … they’ll do [a] one percentage point cut," he remarked.

Such a reduction may benefit consumers struggling with their finances, as the prices of mortgages and loans from banks that pass the cut on may fall as a result.

The MPC’s December announcement on interest rates brought a one per cent cut, meaning the figure currently stands at two per cent.

By Tom Musk