Decent chance of base rate reduction, says Capital Economics

The Bank of England's Monetary Policy Committee (MPC) voted unanimously in September to maintain base rate and quantitative easing at their current levels. Minutes from the latest MPC meeting show that all nine members decided to keep the base rate at 0.5% and continue with the £375bn asset purchase programme. However, Capital Economics still think that the Bank of England base rate could be lowered this year. Martin Beck, UK economist at Capital Economics, is quoted as saying: “We think there continues to be a decent chance of an interest rate cut in November. We also still expect another £50bn of asset purchases to be announced at November's meeting and for QE to ultimately reach £500bn.” The rate of inflation has fallen back to 2.5% and is now closer to the official 2% target. September 21, 2012