Rates should only fall gradually, says MPC member

Those hoping for swift cuts in interest rates in order to make mortgages cheaper may find their hopes dented following comments by a member of the Bank of England's monetary policy committee (MPC).

Speaking at the Institutional Money Market Funds Association Annual Dinner, Paul Tucker, one of the nine-member committee, said the MPC would need to proceed slowly and gradually as it cuts the base rate.

He argued that to do otherwise would be to "let the inflation genie out of the bottle", something that could force the Bank to raise rates again and consequently make the slowdown more severe.

Such a suggestion from Mr Tucker, who stated he was yet to make his mind up about whether to vote for a cut next week, may indicate that those hoping for lower priced mortgages could be better off looking at the self build option instead.

Bank of England governor Mervyn King acknowledged earlier this week that the MPC faced a "difficult balancing act" in keeping inflation down while avoiding too severe an economic slowdown.


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