Base rate could be reduced in Bank's next decision

It is likely that the Bank of England's Monetary Policy Committee (MPC) will announce a reduction in the base rate this month.

That is the opinion of chief European and UK economist Howard Archer, who anticipated that interest rates would be cut in response to the "increasing downside risks to UK growth stemming from tight credit conditions".

Consequently, he predicted that the MPC would make a 0.25 per cent cut to the base rate.

Mr 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 by a further 25 basis points to five per cent at its April meeting."

Nevertheless, he conceded that high inflation risks meant that the decision was "an extremely close call".

Mr Archer went on to forecast that interest rates could "fall to a low of four per cent in the first half of 2009".

The next interest rate decision will be announced on Thursday, April 10th.

Mortgages News posted on 04/04/2008 09:18:24