MPC likely to cut rates further in May and August
Barclays Stockbrokers, 06 March 2008
Commenting on today’s MPC interest rate decision to hold at 5.25%, Henk Potts, Equity Strategist at Barclays Stockbrokers said: “The Monetary Policy Committee (MPC) voted 8-1 to cut rates by 25 basis points in February. According to the minutes, the cut was a result of deterioration in financial markets, property markets and the international environment.
“However, the minutes showed that Bank of England is less concerned about the impact of turmoil in credit markets than the financial markets are, hence expectations of aggressive cuts this year now look excessive.
“The MPC now has to respond to the effects of slowing economic growth and the ongoing threat of inflation, a fine but difficult balancing act. We think that the MPC will cut rates by a further 25 basis points in May and August, meaning that rates should finish the year at 4.75%.”
For further information contact:
Caroline Wells / Nicola Hankey PR, Barclays Wealth + 44 20 7114 7435 / +44 20 7114 9813
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