/24-7PressRelease/ - LONDON, UK, February 03, 2008 - A poll by Reuters comprising 60 economists shows that there is a 70% probability of the Bank of England delivering a quarter point cut in February and a 90% probability of a cut by March. However, the median forecasts put the probability of an aggressive 50 basis point rate cut in February at a mere 10%.
Last time, the Bank of England cut the interest rate in December that pulled down the base rate from 5.75% to 5.50%. It was the first drop in the last two years. However, another rate cut within two months, if carried out, will be a juggling act between maintaining the target consumer price inflation of 2% and giving a push up to the slowing economy.
According to Nationwide, the largest building society, property prices in the UK fell for a third consecutive month in January. The Bank of England's figures show that mortgage approvals for house purchases fell for a seventh consecutive month in December to the lowest level since records began in 1999. All these facts confirm the possibility of another interest rate cut this month.
Danny Gabay, managing director of Fathom Consulting, said: "A 25 basis points cut is all but assured. We think there is a decent chance (40 percent) that the committee will seek to regain the initiative by taking a bolder step, and easing by 50 basis points."
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