MPC 'will cut base rate' this afternoon - commercial mortgages

08 January 2009

Several analysts have predicted that the base rate will be cut today as the Bank of England's monetary policy committee (MPC) carries out its monthly meeting.

In a survey carried out by Adfero, 13 economists estimated that the MPC will opt to trim the base rate - something that could lower the cost of commercial mortgages.

Reductions of up to 100 basis points were predicted by the analysts in the poll.

Martin Gahbauer, a senior Nationwide economist, claimed that the MPC will choose to reduce interest rates due to increasing levels of unemployment coupled with a shrinking economy.

And Simon Rubinsohn of the Royal Institution of Chartered Surveyors said that a 50 basis point cut will be unveiled because of the "continuing deterioration in the economic news flow".

Currently at two per cent, the base rate was last trimmed on December 4th.

Commenting on the MPC, Royal Bank of Scotland economist Ross Walker remarked: "There's not a lot of room left at two per cent so they might be minded to move in smaller stages."