Belfast Telegraph

UK Website Of The Year

Ulster economists look to interest rate cut

By Robin Morton

Published 07/10/2008

Local economists today predicted that interest rates were in line for a cut on Thursday - by perhaps as much as 0.5%.

Ulster Bank economist Richard Ramsey said it was possible that the Bank of England Monetary Policy Committee (MPC) would cut the rate from 5% to 4.5%.

But Alan Bridle, head of economics and research at Bank of Ireland Northern Ireland, was more cautious, predicting a cut of just 0.25%.

The MPC is due to start its two-day meeting tomorrow and announce its verdict on Thursday.

Interest rates have been pegged at 5% since April.

Mr Ramsey said: “Uncertainty and volatility continues to reign despite the approval of the $700bn bailout package on Friday.

“Rate cuts in the US, UK and Euro area are now top of the agenda. The Bank of England is the only central bank scheduled for an interest rate decision this week.

“However, with the marked deterioration in financial market and economic conditions, the prospect off the ECB, Fed and BoE making a co-ordinated interest rate announcement later this week would not come as a surprise.”

Mr Bridle said the latest tightening of conditions in the UK money markets might give the MPC sufficient “wriggle-room” to cut base rates to 4.75%.

He said: “The one complication remains inflation - the September numbers will not be released until October 14 and potentially could be above 5%, as against the target of 2%.

“The MPC should receive a preview of the data but it might be asking too much to expect all MPC members to sanction a rate cut against such a backdrop.”

Belfast Telegraph

Your Comments

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting?

Read More

From Belfast Telegraph