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Interest rates 'might go to 4%'

A financial analyst has predicted that interest rates might bottom out at four per cent this year.Capital Economics suggested cutting rates can have a revitalising effect on the economy - as it makes borrowing for cards, mortgages and personal loans less expensive. The comments follow two rate reductions from the Bank of England over the past four months due to the apparently stagnating UK economy. "We think that they'll only continue to cut rates slowly, which obviously means there will be less of a stimulus to the economy," Paul Dales at Capital Economics commented. "We see rates going down to around four per cent, but we don't think they'll get there any time soon - which will play a part in how low rates have to go." Currently, the base rate stands at 5.25 per cent.

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