Reeves banks on cuts

FIVE-MINUTE GUIDE TO... INTEREST RATE OUTLOOK

- By Harvey Jones

AS THE UK economy falters, Chancellor Rachel Reeves will be desperately hoping the Bank of England (BoE) cuts interest rates at Thursday's meeting.

She's likely to get the answer she wants, with markets saying there's a 90% chance the BoE's rate-setting monetary policy committee (MPC) will cut the official bank rate from 4.75% to 4.50% on February 6.

That would mark its third cut of 0.25% since last August, when the base rate was 5.25%, which would be welcome for homeowners, mortgage borrowers and the wider UK economy.

Savers may not be so pleased, though, as banks and building societies are likely to cut savings rates in response.

The European Central Bank is moving much faster as it attempts to revive the very sluggish eurozone economy, cutting its rates by 25 basis points to just 2.75% on Thursday.

David Zahn, head of European fixed income at Franklin Templeton, predicted that eurozone rates would end the year at just 1.5%.