16 November 2007
The clearest signal yet that interest rates are to fall soon has been made by the Bank of England, whose Monetary Policy Committee (MPC) meets to set the rate each month.
Rates have been raised five times to match 18 months of economic growth and currently stand at 5.75% - a situation which will soon change, the bank's latest quarterly Inflation Report hints.
The ongoing global credit crunch has led to fears of a slowdown in the UK economy, with borrowing on personal loans and mortgages becoming more difficult as consumers cut back on spending.
Facing similar concerns the Federal Reserve, the US equivalent of the Bank of England, has slashed its rates by 0.75% since the summer in a bid to boost the economy by making borrowing cheaper.
The Bank seems likely to follow suit soon, as its Inflation Report contains a gloomy economic forecast for the next year, with predictions of a slowdown in growth and higher inflation.
"November's Inflation Report gives a clear signal that a series of interest rate cuts lie ahead," Vicky Redwood, an economist at Capital Economics, told the BBC.
"We are going to see two or three interest rate cuts in 2008," economist at BNP Paribas Alan Clarke predicted to Reuters.
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