Bank Of England to Cut Rates to help Survive the Credit Crunch

It is widely thought that tomorrow the Bank of England will cut interest rates to help the UK economy and encourage borrowing within UK banks.

Traditionally rate rises or cuts always follow a move of 0.25%. Experts are divided on what will happen tomorrow although it is possible a cut of 0.5% could be seen. The Bank of England will be concerned about rising inflation but these worries will probably be brushed aside when the announcement is expected late morning tomorrow (9th October 2008).

Richard Branson of the Virgin Group has suggested a cut of 1% but that is unlikely to happen although if a cut tomorrow doesn't work we could see a reduction from the 5% we have now to 4% by Christmas.

The rate cuts won't make an immidiate impact on the economy but gradually you would expect mortgage, loan, credit card and overdraft rates to drop if the Bank of England makes the cut of 0.5% that the majority of experts predict.