Interest rates ‘may drop to 4% in 2009′

Although recent predictions suggested that the Bank of England interest rate would remain unchanged, an expert has said that it could drop to four per cent in 2009.

Howard Archer, chief European and UK economist for Global Insight, said that the Bank of England will almost certainly keep interest rates at five per cent this Thursday.

Mr Archer predicted that rates are unlikely to drop before August at the earliest, however he also said that they may drop next year.

“We still believe that interest rates could eventually fall as low as four per cent in 2009, but it will be a gradual process,” he commented.

However, he also said: “The bank will want clear evidence that wage moderation is continuing and that reduced demand is undermining companies’ pricing power.”

In related news, net credit card lending rose by £100 million in April, although this was still below the increase in March, according to the bank.

Tags: bank of england, Global Insight, credit card lending, gradual process, March