Interest rates could hit 2% in a year

Industry experts have predicted that although inflation has hit a sixteen year high at 5.2 percent, the Bank of England will cut the base rate again before Christmas, with another cut of 0.5%. The central banks already cut rates by 0.5% recently a day ahead of the scheduled Monetary Policy Committee meeting where rates are usually set.

Some officials have predicted that within the space of a year the base rate, which currently stands at 4.5%, could plummet to just 2%, as members of the MPC put inflationary concerns on the back burner and concentrate on trying the get the economy back on its feet. MPC officials have already said that inflation is likely to start coming down, giving them more room to cut interest rates.

Some say that the next half point cut could come in November, but one economist stated: ‘In a sense, it will be too little, too late because it will not stop the economy from heading into a pretty deep recession. They wanted a slowdown in the economy but it is becoming clear that the downturn is deeper than they intended.’

Tory Party official Phillip Hammond said recently: ‘With inflation at its highest since 1992, families are trapped in a terrible vice of soaring prices on the one hand and stagnant take-home pay on the other. Once again, we are seeing how Britain is paying the price for Gordon Brown’s Age of Irresponsibility.’