Business leaders call for rate cuts before Bank policy meeting

03/11/2008

Borrowers on variable rate loans might receive some good news later this week.

The Bank of England is widely expected by analysts to reduce its lending rate on Thursday, following a meeting of policymakers.

In turn, this rate cut could be passed on by loan and mortgage providers - easing the repayments burden for many.

Last month, the Bank cut its rate from five per cent to 4.5 per cent.

A new poll from New Star and the Observer newspapers predict a further 0.5 per cent reduction to come this week.

However, some of the industry experts polled suggested that a larger cut would be more helpful - as a lower rate would give people more money to spend and would therefore make a deep recession less likely.

"A full-point cut is needed to prevent the [economic] downturn from gathering pace," Steve Radley, chief economist at the Engineering Employers' Federation, said.

Rate reductions were also called for by Graeme Leach at the Institute of Directors and Richard Lambert at the Confederation of British Industry.

Tags; Debt Management and Banking, Young Family Finances,

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