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Analyst forecasts more rate cuts

Analyst forecasts more rate cuts

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The inflationary pressures that are currently holding back the Bank of England's monetary policy committee (MPC) from lowering interest rates will dissipate as the year goes on, an analyst has predicted.

Last month the consumer prices index (CPI) rate of inflation reached three per cent, the highest permissible level before the governor of the Bank of England Mervyn King would have to write a letter to the chancellor explaining how the MPC would act to bring it down.

However, Barclays Wealth analysts Henk Potts, writing for City AM, said the situation would not last, even though inflation might hit four per cent in the near future.

He stated: "We continue to suspect that, as the UK slowdown intensifies over coming months and UK inflation passes its peak, the MPC will resume a policy of monetary easing by year end."

Such a move could mean good news on the way for anyone seeking a homeowner loan.

The latest Bank of England inflation attitudes survey, published today, has revealed that the most common response to the question of what should happen to interest rates has been to suggest they are cut.

Such a view was proffered by 45 per cent of those polled, up by ten per cent on the previous poll in February this year.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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