Pre-holiday rate cut 'less likely'

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Pre-holiday rate cut 'less likely'

Wed 21st Nov 2007

The chance of the Bank of England's monetary policy committee cutting the base interest rate before Christmas is decreasing, according to new predictions.

Drew Wotherspoon of John Charcol said that the most recent MPC meeting minutes reflect a hesitancy by the committee to take action to reduce rates until it can assess the longer-term state of the economy.

He explained that the minutes "show that despite external calls for an immediate cut in interest rates, the majority of committee members felt that there is still time to wait and see whether the economy is really slowing to the degree needed".

Mr Wotherspoon highlighted a recent decision by lender Standard Life to increase its standard variable rate (SVR) even though the MPC did not change the base rate.

"Admittedly, Standard Life's SVR is still in line with the market, but that will not be an easy pill to swallow for its customers," he added.

A total of two out of nine members of the MPC voted to cut the base rate, the minutes reveal.

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