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BoE expected to cut interest rates 4 times next year - report
LONDON (Thomson Financial) - The Bank of England is likely to slash interest rates four times next year in response to a sharp slowdown in growth, The Sunday Times reported citing economists. The first cut could come as early as next month, following the Monetary Policy Committee's unanimous decision to cut the Bank rate from 5.75 pct to 5.5 pct earlier this month. Four cuts would take the rate to 4.5 pct, the level at which the Bank started to raise rates in August last year, the newspaper said. The prediction of four rate cuts next year comes in new reports from the Centre for Economics and Business Research (CEBR) and BNP Paribas. Both expect weak growth to outweigh the Bank's worries about the inflationary impact of dearer food and energy. 'The Bank signalled its intention to take a more active role in supporting financial markets and the economy with the unanimous decision to cut interest rates in December,' said Richard Snook of the CEBR. Alan Clarke, UK economist at BNP Paribas, said the weakness in the economy -- he expects just 1.6 pct growth in 2008 -- would force the Bank's hand. 'We believe the consensus is underestimating the extent of Bank of England rate cuts,' he said. 'We expect the trough in Bank rate will be 4.5 pct next year and, if anything, the risks are to the downside,' he added. [email][email protected][/email] ml/ak COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.