Interest rates to be cut 'slowly'
(05 February 2008)

The Bank of England will reduce interest rates "slowly but gradually" to maintain the economy, according to an expert.

A 25 basis point reduction has been predicted for this week, with it only reaching a 50 point cut if a sharp fall in equity prices occurs, said Global Insight.

Howard Archer, chief European and UK economist for Global Insight, said: "Despite calls for a 50 basis point reduction, we expect the Bank of England to trim interest rates by 25 basis points to 5.25 per cent next Thursday."

Mr Archer also predicted that there would be gradual cuts to carry out the "difficult balancing act of trying to support growth while containing underlying inflation pressures."

The economist said that if last minute figures on the UK's growth outlook had started to deteriorate then a 50 point cut may be likely.

An interest rate decision is expected this Thursday, when cuts from the current 5.5 per cent rate are expected.