Don't Bank on instant cut to interest rates

THE BANK of England’s expected decision to cut interest rates by 25 basis points could be a “closer call” than markets predict, analysts have said.

- By JOHN SMITH

Markets have all but priced in interest rates falling to 3.75% at the Bank's next decision in mid-December, after a flurry of data points pointed to a continued decline in inflation levels.But economists at Oxford Economics have warned that the Monetary Policy Committee's decision could be tighter than analysts assume, given splits in opinions among policymakers.

Economists Andrew Goodwin and Edward Allenby suggested that there will be a “closer call”, given recent surveys have pointed to higher inflation expectations trends than some hawkish members on the MPC might feel comfortable with.

“As has been the case in two of the past three meetings, the decision will come down to which group Governor Andrew Bailey sides with,” they said.