Building society predicting rate cut

03-Apr-2008

The Bank of England’s monetary policy committee is likely to cut the base rate of interest this month, according to one firm.

In what could be good news for first-time buyers seeking a mortage, Nationwide Building Society is predicting a 0.5 per cent cut this month, down from its present level at 5.25 per cent.

The company said that there is a 60 per cent chance that the Bank would take such a step, a ten per cent chance that they will be cut by 0.25 per cent and 30 per cent chance that they would remain the same.

"In the future we are anticipating that there will be two further rate cuts for the rest of 2008 and we’re expecting interest rates to come in at around 4.75 per cent by the end of the year," the company claimed.

This prediction for a 0.25 per cent cut is shared by Howard Archer, UK chief economist at Global Insight, who suggested that the "increasing downside risks to UK growth" were likely to prompt the Bank into action.

However, the expert noted that it remains "an extremely close call".

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