Interest rates ‘will go to 3.5%’
Mortgages for professionals holders will soon benefit from sharp interest rate cuts from the Bank of England, Capital Economics has predicted.
According to the firm, the base rate could be reduced by as much as 1.5 per cent over months to come - bringing its current level of five per cent down to just 3.5 per cent.
The move would provide a welcome boost to the economy - by encouraging more people to borrow.
However, high inflation and worries of further price rises has thus far worked as a major block to the Bank reducing the rate.
Capital Economics issued its forecast in the belief that this inflationary trend would soon moderate.
Jonathan Loynes, chief European economist at Capital Economics, added: "With inflation likely to rise further over the next few months I think they probably won't cut rates for a little while, [but] we have [predicted] the first cut coming through in the fourth quarter, possibly November, and we then think rates will fall quite sharply next year; perhaps to about three and a half per cent.
"Given the state of the economy, once these concerns about inflation are finally out the way then they will want to bring interest rates down pretty quickly in order to limit the severity of the economic downturn."
According to the firm, the base rate could be reduced by as much as 1.5 per cent over months to come - bringing its current level of five per cent down to just 3.5 per cent.
The move would provide a welcome boost to the economy - by encouraging more people to borrow.
However, high inflation and worries of further price rises has thus far worked as a major block to the Bank reducing the rate.
Capital Economics issued its forecast in the belief that this inflationary trend would soon moderate.
Jonathan Loynes, chief European economist at Capital Economics, added: "With inflation likely to rise further over the next few months I think they probably won't cut rates for a little while, [but] we have [predicted] the first cut coming through in the fourth quarter, possibly November, and we then think rates will fall quite sharply next year; perhaps to about three and a half per cent.
"Given the state of the economy, once these concerns about inflation are finally out the way then they will want to bring interest rates down pretty quickly in order to limit the severity of the economic downturn."
