Interest rate 'could stay at 5%'

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Interest rate 'could stay at 5%'

The Bank of England's monetary policy committee (MPC) may not reduce the base rate any further this year, one expert has suggested.

According to Charles Davis, economist at the Centre for Economic and Business Research, it is possible that there may be no more cuts to the interest rate during the remainder of 2008.

"Whereas before we were looking at [interest rates falling] perhaps down to as low as 4.5 or 4.25 per cent, I think we are now probably looking at 4.75 to five per cent by the end of the year," he remarked.

Speculation of the number of cuts that could be made in 2008 arose following the quarter-point reduction in December 2007, which was followed by further 0.25 per cent drops in February and April.

Mr Davis said rising inflation is responsible for the change in predictions.

An Adfero poll of eight economists and financial institutions has resulted in a unanimous forecast of a hold when the MPC meets later this week.
ADNFCR-323-ID-18619765-ADNFCR

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