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Will the Bank of England reduce interest rates?

As we approach Thursday's meeting of the Bank of England's monetary policy committee there is a growing expectation that rates will be reduced by half of one percent. While some are calling for a more severe cut in base rates it looks as though yet again the bank will err on the side of caution at a time when drastic action is actually required.



A falling housing market, difficult trade on the high street, increased mortgage default levels and general concern that the UK economy is stuck in a serious downward spiral should be enough to see rates fall but we should find out for sure on Thursday. It will also be interesting to see how those on the committee vote as this could give a general indication of future activity on this front.



Those who are expecting a turnaround overnight will be sorely disappointed as the interest rate reduction will (if it happens) take some time to kick in to the general economy. The government is in desperate need of a turnaround in UK fortunes as after a short-term pickup when the rescue package was announced we are seeing confidence ebb away from the consumer market.

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