Base rate 'to fall gradually'

The Bank of England will not cut interest rates rapidly in the manner of the US Federal Reserve, an economist has predicted.

Speaking ahead of the announcement of the Bank of England monetary policy committee decision on interest rates at noon today, Howard Archer, chief economist at Global Insight, said the fairly strong growth rates in the UK economy and the fear of inflation made it "unlikely" the US policy would be copied in Britain.

"Instead, the Bank of England is likely to cut interest rates gradually but steadily," he forecast.

The slow rate of decline in the UK base rate may mean it takes some time before mortgage rates become affordable for some first-time buyers.

Many aspirant homeowners may respond by looking at the self build option as an alternative.

The US Federal reserve cut the Federal Funds rate twice in January, by 0.75 per cent and 0.5 per cent.


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