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Interest rate cuts 'could benefit credit card customers'

A further reduction in UK interest rates is expected by an industry expert - a decision which may benefit credit card customers.

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2 February 2009

Interest rate cuts 'could benefit credit card customers'”

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Lloyds TSB's senior economist Jeavon Lolay said the Bank of England's monetary policy committee (MPC) may decide to lower rates to below one per cent.

"We think that interest rates are going to approach a floor, whether that is going to be one per cent or half a per cent or even lower than that," he commented, adding the committee may then "re-issue what they have been saying about other measures being required".

A zero per cent rate cannot be ruled out, Mr Lolay continued, as this figure has been targeted in the US.

The industry will probably receive a signal from the MPC before rates hit a floor, he concluded.

Last month, the MPC lowered interest rates by 0.5 percentage points to 1.5 per cent. This followed a one percentage point reduction - bringing rates to two per cent - in December 2008.

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