As the Bank of England's monetary policy committee (MPC) begins discussions today (January 7th) over whether to make further cuts to the base rate of interest, one sector commentator has claimed that future interest rates depend on sterling.
In addition, Michael Baxter, economist at Defaqto, said the decision would also be dependent on what the eurozone is doing.
"I think the British rate of interest will fall; it will probably maybe fall somewhere around half of one per cent in six months time but it does depend on what happens in the eurozone," he explained.
Mr Baxter added that the rate of interest in the eurozone needed to fall by more than the UK rate because otherwise the pound could be in trouble.
On Thursday December 4th 2008, the MPC voted to reduce the base rate of interest by one percentage point to two per cent.
It will announce tomorrow whether it will take further action this month.
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