The Bank of England is under mounting pressure to cut interest rates next month as growth slows to a crawl.
Figures from the Office for National Statistics yesterday showed gross domestic product grew by just 0.1 per cent in the final quarter of last year – worse than expected and following 0.1 per cent growth in the third quarter.
Bank deputy governor Sarah Breeden said it was ‘reasonable to expect there to be a cut over the next couple of meetings’.
Last night, market positioning indicated that traders saw a 63 per cent chance of a cut in interest rates from 3.75 per cent to 3.5 per cent when Bank of England officials meet on March 19.
The Bank’s rate-setting Monetary Policy Committee (MPC) is split down the middle, voting by a narrow 5-4 majority last week to leave rates on hold.
Hawks on the MPC are worried about inflation, which at 3.4 per cent is the highest in the G7 group of advanced economies, while doves who want to cut rates are more concerned about signs of slowing growth and rising unemployment.
Breeden, who was among those who voted for a cut, said it was ‘appropriate for us to take our foot off the monetary brake a little bit and provide a bit more support for the economy’.
The Bank’s rate-setting Monetary Policy Committee is split down the middle, voting by a narrow 5-4 majority last week to leave rates on hold
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