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Interest rates 'likely to fall to 4.5%'
The Bank of England is likely to cut interest rates to 4.5 per cent by the end of this year, with further cuts in 2009, an economic expert has predicted.
Such cuts could be good news for borrowers with variable rate loans and mortgages, as lenders might pass on any reductions in the base rate, but Howard Archer, chief European and UK economist for Global Insight, said they will only happen if the country avoids recession.
Interest rates currently stand at 5.5 per cent. The Bank of England's monetary policy committee is due to meet on February 7th to decide if any change will be made this month.
Mr Archer said that with growth below expectations, cuts will be on the cards in the near future if the UK can avoid slipping into recession.
"We forecast GDP growth to be limited to 1.8 per cent in both 2008 and 2009, which would be the equal weakest performance since 1992," he said.
However, he added, with risks for the UK economy mounting, there is a possibility that rates could fall further and at a faster rates than his current prediction.