Bank of England under pressure to cut interest rates

Posted 2007-12-6

The Bank of England’s Monetary Policy Committee is under pressure to cut interest rates today. Interest rates rose five times since August 2006, but have been unchanged since July. However, analysts expect the cost of borrowing to drop to 5.5% from 5.75%. Global Insights Howard Archer said:
“[the December 2007 rate decision] is one of the tightest calls ever”.
A key factor in a rate cut is the growth in the Libor rate, the rate at which banks lend to one another. This has led to the “credit crunch” that consumers and banks alike have suffered in the second half of 2007.

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