Bank urged to cut interest rates

Posted: 27 Mar 2008 16:23:24 GMT

An independent mortgages expert has called for a further cut in interest rates.

An independent mortgages expert has called for a further cut in interest rates.

Yesterday, Bank of England governor Mervyn King told the Treasury select committee that an interest rate cut is more likely because of the tough lending conditions.

However, he also warned that deciding whether and how to change the baseline rate was a "difficult balancing act".

The latest figures show that inflation is already above the Bank's two per cent target and is likely to rise further to three per cent.

John Charcol's Katie Tucker accepted that a further Bank rate cut would "not normally be expected" given the predictions of strong growth and rising inflation levels.

"However, cash-strapped homeowners will be relieved to know that some relief to their purse-strings may still be due, as mortgage lenders' own cost of borrowing is high, and a further Bank rate cut may be used to relieve this," she added.

Earlier this month, the monetary policy committee voted to keep interest rates on hold at 5.25 per cent.



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