Borrowing rates ‘likely to be cut’

The cost of borrowing in the UK looks likely to be reduced over the course of the next few months, according to expert assessment of the Bank of England’s latest inflation data.

Howard Archer, chief UK and European economist at Global Insight, is convinced that at least one and probably two cuts in the base rate of interest are in the Bank of England’s plans.

The news could comfort some of the UK’s credit consumers, many of whom have found debt management an increasingly difficult task as borrowing rates increased five times since August of last year.

Mr Archer remarked: “The Bank of England quarterly inflation report is markedly more dovish and indicates that at least two interest rate cuts are likely.”

“However, it remains somewhat uncertain as to when exactly the first cut in interest rates will occur, with [the bank’s governor] Mervyn King indicating that the timing will be driven by the data and inflation outlooks.”

Including mortgage arrears, the average British household has a debt management burden of more than £55,000, according to the latest figures from the Credit Action charity.

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