Bank to trim base rate 'by another 0.5 per cent'
The Bank of England's monetary policy committee (MPC) is likely to
cut the base rate by another 0.5 per cent, it has been
predicted.
Lloyds TSB economist Trevor Williams suggested that the MPC will
reduce the rate from its current one per cent before resorting to
other methods of monetary policy.
He argued that the rate will not fall below 0.5 per cent for
practical reasons, explaining: "Money markets need a margin above
to transact the cost of mortgage lending so I think half a per cent
is about as low as the authorities are likely to go."
A further reduction of 0.5 per cent could help lower mortgage costs
for first-time buyers.
The MPC will vote on the base rate tomorrow, having decided to cut
it during each of its last five meetings.
Before the recent run of reductions began in October 2008 the
figure stood at five per cent.
