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Economists Predict Two More Interest Rate Cuts
14/02/2008
A poll of 54 top UK economists carried out by Reuters this week indicated that the Bank of England will very likely cut interest rates in June to 5% and again in September to 4.75%.
Only one economist in the poll said that he did not expect interest rates to come down further this year from the current 5.5%, indicating near unanimity on the prediction.
Concerns that inflation may take a grip over the next few months suggest that rates may not fall to 4.5% as predicted by the UK financial markets.
According to the head economist at Capital Economics, Jonathan Loynes, the markets are overestimating how far and how fast interest rates are going to fall.
A spokesperson for the Bank of England said on Wednesday that the bank was determined to bring inflation back to target. The bank expects inflation to be around the 3% mark by the middle of the year and expects growth in the GDP to slow to about 2% by the year end.
Only one economist in the poll said that he did not expect interest rates to come down further this year from the current 5.5%, indicating near unanimity on the prediction.
Concerns that inflation may take a grip over the next few months suggest that rates may not fall to 4.5% as predicted by the UK financial markets.
According to the head economist at Capital Economics, Jonathan Loynes, the markets are overestimating how far and how fast interest rates are going to fall.
A spokesperson for the Bank of England said on Wednesday that the bank was determined to bring inflation back to target. The bank expects inflation to be around the 3% mark by the middle of the year and expects growth in the GDP to slow to about 2% by the year end.