Interest rates ‘will fall as the year progresses’

Interest rates are likely to fall to 4.5 per cent by the end of the year and reach four per cent in the first half of 2009, according to Global Insight.

Howard Archer, chief UK and European economist for the economic analysis firm, explains that these predictions are based on the assumption that the UK will avoid a recession.

In news that may be welcomed by those consumers who are currently in debt through borrowing, Mr Archer added that with increasing risks to Great Britain’s economy “there is … a very real possibility that interest rates will fall further and faster than this”.

Global Insight forecasts gross domestic product growth to be limited to 1.8 per cent in both 2008 and 2009.

The interest rate is currently 5.5 per cent and the Bank of England’s monetary policy committee is due to make a decision on whether to change it next Thursday.

It was last reduced on December 6th by a quarter of a percentage point.