Taking the rate from 4.75 per cent back down to 4.5 per cent, the move could be seen as a foreshadowing of next Thursday’s Monetary Policy Committee (MPC) base rate announcement.
This is the second consecutive US rate cut – with September’s half point cut proving to be the first rate reduction in the last four years. It is hoped that this will encourage a degree of stability to return to the US market after the sub-prime crisis which has rippled out across the pond.
The announcement follows Wednesday’s strong pound hitting a 26-year high against the dollar at $2.08.
The industry is waiting with baited breath to see what the outcome of next Wednesday’s MPC will be. After the October vote was split 8-1 in favour of holding rates and the one lone voice against this was voting for a reduction, it is widely speculated that November will see rates drop back down to 5.5 per cent.
Indeed, statistics from Legal and General have shown that November is the month in which most rate changes have taken place during the MPC’s ten-year history.
