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Further interest rate cuts predicted

Some credit card borrowers may be able to take a positive out of the recession, if one leading economist's predictions turn out to be correct.

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29 January 2009

Further interest rate cuts predicted ”

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Some credit card borrowers may be able to take a positive out of the recession, if one leading economist's predictions turn out to be correct.

The Bank of England has implemented a succession of base rate cuts during the past 12 months in a bid to deal with the economic slowdown - with the last change seeing the rate reduced by half a percentage point to 1.5 per cent.

With the country now in recession, Charles Davis of the Centre for Economics and Business Research has predicted further action by the Bank's monetary policy committee.

He explained that further reductions in the base rate are imminent and speculated that it could fall as low as 0.25 per cent or even zero in the coming months.

Mr Davis added: "The key point is that we see them staying there for a very long period of time; almost inevitably through the rest of 2009 and into 2010."

Should credit card companies choose to follow the Bank of England's lead and reduce interest rates, some borrowers should be able to reduce their outgoings as the recession continues to bite.

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