Bank tipped to cut base rate by 0.25%

Analysts are speculating that the Bank of England’s monetary policy committee to will chop interest rates this week, amid signs of an economic downturn, bringing the key base rate of interest to 5%.

A study from the Halifax yesterday showed that house prices slumped 2.5 per cent during February. There are also indications that retail spending is moderating.

The Director of the Confederation of British Industry said: “Despite the MPC’s attempts to loosen monetary policy through two recent interest rate cuts, the credit crunch is pushing interbank and mortgage lending rates up, which is constraining economic activity and demand”.

“The Bank should make a quarter point cut now, rather than later, to help hard-pressed businesses and consumers.”

The Bank has cut interest twice since December.

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