Slash in interest rates expected with the pound suffering

According to the Bank of England’s Monetary Policy Committee meeting back in November, business conditions were described as rapidly deteriorating, hence the reason why interest rates are expected to be slashed once again today.

This view has been backed up by the continued bad news regarding the service sector slowing at a record pace in November. The sector accounts for 75 percent of the nation’s economic output and the signs are there for an even greater and more prolonged recession.

Property prices are still falling and consumer and business confidence is similarly at record lows and so policymakers are in line to make a drastic cut, a view espoused by George Buckley, the Deutsche Bank’s chief UK economist, who said that the data has been backing this the whole way.

The pound has maintained its steady fall against the dollar today as currency markets are aware of the impending interest rate cut.

Sterling fell to $1.4528 against the dollar and it is at a 13-year low at present, however it does all depend on the Bank of England’s decision later in the day.

However some analysts have been debating the extent of the rate cut as Martin Weale, the director of the National Institute of Economic and Social Research, has indicated that a one percent rate cut would make little difference to the current economic slump.

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