Interest rate cut expected in February

A poll of economists shows that many expect the Bank of England will cut interest rates three times in 2008, with the first fall in February.

The Reuters poll showed that the majority expects interest rates to fall to 5.25% in February. Only 19% of those polled expects a rate cut at the next Monetary Policy Committee meeting.

This takes place on January the 10th.

Last month’s interest rate cut took industry analysts by surprise. They were again caught off guard by the news that the MPC discussed a half point cut at the December meeting.

However, many surveyed doubt there will be another cut. Philip Shaw, chief economist at Investec, said: “It seems more likely that the committee will hold its fire, as the fear of inflation pressures encourages it to adopt a more cautious line on interest rates.”

The survey also showed that many economists expect three cuts in 2008, which would bring rates to 4.75%.

The interest rate cuts are expected to boost the housing market, which has seen falling house prices and a decline in mortgage approvals.

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