Rate cut in May ‘looks unlikely’

A cut in the base rate of interest does not appear to be on the cards for later this month, according to one expert.

Howard Archer, chief UK economist at Global Insight, is convinced that homeowners and consumers with debt management issues will have to wait until June before the Bank of England tries again to reduce the cost of borrowing.

Mr Archer’s comments came in response to what the bank’s governor Mervyn King told a treasury committee meeting this week about the state of the economy.

The governor expressed concerns that inflation would rise in weeks to come as a result of increased food and fuel prices and the potential for wage settlements to rise.

Mr Archer said: “The overall impression that we get is that Mr King believes that the UK economic slowdown is not marked enough, at this stage at least, to step up the pace of monetary policy easing.”

The latest figures from Credit Action indicate that the typical British household currently pays out around £3,765 annually in interest on their debts.