Bank expected to cut interest rates

The Bank of England is expected to bow to pressure from industry and unions and cut the cost of borrowing today.

The Bank of England is expected to bow to pressure from industry and unions and cut the cost of borrowing today.

Analysts in the City are predicting the Bank's Monetary Policy Committee will end 12 months of interest rate stability with a quarter-point reduction when it announces its decision at midday.

The Bank has been under increasing pressure to act since last month after two aggressive half-point cuts in American rates by the US Federal Reserve, which were attempts to bolster the flagging US economy.

Industry and unions have warned that a UK rate cut is needed to boost confidence and prevent the effects of the rapid US slowdown damaging prospects in Britain.

So far, the Bank has taken a cautious approach, with the more 'hawkish' members arguing that they should wait for clear evidence that the British economy has also slowed before moving on rates.

But after last month's knife-edge 5-4 vote to keep rates on hold, most analysts are forecasting that there will be a majority for a cut this time.

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