Interest rates 'will be cut' ? commercial mortgages

03 December 2008

Industry insiders have predicted that the Bank of England will cut interest rates when its monetary policy committee (MPC) meets this week.

In a recent poll of eleven economists, financial experts and businesspeople conducted by Adfero, the unanimous verdict was that the base rate will be lowered.

Paul Dales from Capital Economics predicted a 100 basis point cut while Michael Baxter of Defaqto and Ross Walker from Royal Bank of Scotland opted for a 0.75 per cent reduction.

Richard Dodd of the British Retail Consortium estimated that the rate will be lowered by 0.5 to one per cent and Sebastian Howell, vice president of Morgan Stanley, said it would be a 50 basis point cut.

Howard Archer, UK chief economist for Global Insight, commented: "We are modestly leaning towards them making a cut of 100 [basis points], based on the dismal state of the economy."

The MPC will meet on December 4th to decide whether to change the base rate and their actions could have an effect on the cost of commercial mortgages.