Released on: April 7, 2008, 3:25 am

Press Release Author: amenda dorothy

Industry: Financial

Press Release Summary: In order to counter the adverse effects of credit crunch and
inflation, majority of the UK economists are favoring a rate cut.

Press Release Body: London (Ask4loan) April 5, 2008: The Bank of England may cut the
interest rate to stabilize the UK economy and to nullify the growing pessimism among
lenders and borrowers. According to the poll conducted by a leading daily, an
overwhelming demand was in favor of rate cut. A majority of the UK economists expect
the Bank of England to cut interest rates on considering the raft of weak economic
signals. 48 out of 63 economists think the Monetary Policy Committee (MPC) will vote
for a 25 basis points cut to 5 percent in the coming days.

The factors that necessitates the policymakers to take rate cut into consideration are:

CREDIT CRUNCH

The BoE sent a strong message to markets and consumers this week in its quarterly
credit conditions survey that the credit crunch is likely to intensify and credit
availability is going to be more squeezed. The squeezed lending scenario is now
having a tangible impact on the real economy. Money markets remain tight with
interbank lending rates well above the official borrowing costs.

INFLATION

Inflation was at the center of debate for the advocates of no rate-cut. They
strongly resisted cutting rates next week due to the inflation problem that is
helping to make this year what BoE Governor Mervyn King has dubbed the toughest
challenge for the MPC since it was granted independence on rate decisions in the
year 1997.

No doubt, the Consumer price inflation hit 2.5 percent in February and is expected
to rise towards 3 percent in the coming months on the back of rising oil and food
costs. Inflationary pressures are simmering throughout the UK economy as companies
try to pass on their soaring costs to the customers. But, inflation without credit
availability has made the life of common Britons a misery. For the well being of the
economy as a whole, economists favor a rate cut.

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