A drop in interest rates to 0.5 basis points may be necessary by the end of the year, it has been claimed.
Economist at the Centre for Economics and Business Research Arek Obhanissian said that the organisation believes there will be a drop in rates over the course of 2009.
"We are thinking that it will be taken down, by the end of the year, to half. The economy isn't going to get any better between now and then so the Bank [of England] is going to need to do something," the expert said.
Indeed, some experts believe that the interest rate is set to fall again this month. Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said that a cut of half a percentage point is likely when this month's rate is announced later this week.
He noted that continuing weakness in the retail sector, as well as falling house prices and an inability to access credit, are all driving factors that may influence a rate cut.
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