Base rate 'approaching a floor' - commercial mortgages

04 February 2009

The base rate is going to approach a "floor" of around one per cent or lower, it has been predicted.

Jeavon Lolay, a senior economist for Lloyds TSB corporate markets, said that the UK's rate may follow that of the US, where it is almost at zero per cent.

His remarks come as the Bank of England's monetary policy committee (MPC) gears up for its monthly meeting to make a decision on interest rates.

Commenting on the MPC, he claimed: "You can't rule anything out nowadays, but I think it is more likely they will stop at a level they are happy with, half a per cent or one per cent."

If the base rate is reduced when the committee meets later this week, it could help lower the cost of financial products such as commercial mortgages.

A poll conducted by Adfero questioning 12 economists found that 11 feel the MPC will announce a cut on Thursday following its gathering.