Interest rates 'may be cut before the end of this year'

Although the Bank of England's monetary policy committee (MPC) is unlikely to reduce the base rate of interest this month, one expert has predicted there could be a cut before 2008 comes to an end.

Graeme Leach, chief economist at the Institute of Directors, said the MPC would not make a move this month, suggesting that the economy will slow down further before it chooses to take action.

"There is a good chance that there will be a small cut before the yearend - a quarter point cut," Mr Leach said.

However, the expert warned consumers not to expect "anything more than that at the moment".

The Council of Mortgage Lenders recently said the Bank would not cut the interest rate until there is a clearer picture of whether "we are over the spike in inflation".

If this is the case, the bank may choose to reduce rates in an effort to tackle the slowing economy, it added.