Base rate cut ‘almost certain’
The Bank of England's monetary policy committee (MPC) is almost certain to vote for a cut in the base rate next month, a personal finance expert has predicted.
Borrowers with tracker mortgages benefited from the MPC's decision to reduce the rate from 5.75 per cent to 5.5 per cent in December and speculation has been rife that further cuts will follow in early 2008.
Those rumours gained support on Tuesday when the Federal Reserve implemented an emergency interest rate cut from 4.25 per cent to 3.5 per cent in the US in a bid to halt an economic slowdown.
David Kuo of personal finance website Fool.co.uk said there were indications in the minutes of the MPC's January meeting that a February base rate cut is likely, even though Bank of England governor Mervyn King remains concerned about inflation.
"The cuts in interest rates in February may not be as dramatic as the one in America but we will get the quarter point cut," added Mr Kuo.
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