UK interest rates: cuts coming

Article Abstract:

HSBC Markets forecasts sharper falls in UK interest rates than generally expected. UK base rates have risen to 6.75% and only a modest rise was needed to curb inflation. Wage growth has been subdued, and economic growth is slowing in late 1995. Price inflation for manufacturer's outputs should drop in 1996. The timing of a reduction in rates will be influenced by a number of factors, both domestic and foreign. Rates could be reduced in Jan 1996 to allow mortgage rates to be reduced.

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UK interest rates: the unthinkable

Article Abstract:

UK interest rates could drop to below 5% by 1997 according to Roger Bootle from HSBC Greenwell. Inflationary pressures in 1995 have been seen as short-lived, and economic growth is under threat both in the UK and world wide. Tax cuts alone will not solve the problem. Troughs in UK interest rate levels have been successively lower over four cycles of rate changes, and interest rates of between 3% and 4% could be excessive if inflation drops to 2%.

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