Experts forecast rate cut from Bank

05/01/2009

People who want to borrow money from banks might get a boost later this week.

The Bank of England is thought likely by analysts to cut its official interest rate from two per cent to 1.5 per cent on Thursday, the Sunday Times reports.

This would make it cheaper for UK lenders to borrow money - and, it is hoped, this cost reduction would be passed on to customers.

The Bank has been reducing its rate sharply over recent months, as it battles to hold off the worst of the credit crunch and economic slowdown.

David Kern, economic adviser to the British Chambers of Commerce, told the newspaper: "The rapid worsening in the economic situation and growing fears over rising unemployment reinforce the need for the [Bank] to continue with aggressive interest-rate cuts."

Reducing the official interest rate to below two per cent is unprecedented in the Bank's 300-year history.

The last time it was as low as two percent was over 50 years ago.

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