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<title>"base rates heading below 6% ........"</title>
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<!--mstheme--></font><!--msthemelist--><table border="0" cellpadding="0" cellspacing="0" width="100%"><!--msthemelist--><tr><td valign="baseline" width="42"><img src="../_themes/capsules/capbul1a.gif" width="20" height="20" hspace="11"></td><td valign="top" width="100%"><!--mstheme--><font face="arial, helvetica">The MPC cut base rates to 6% at their January meeting. Interest rates have now fallen by 1.5% (or 150 basis points) since October 1998. The Committee cited a turning in the labour market and continued weakness of the International economy as factors behind their decision.
<!--msthemelist--><tr><td valign="baseline" width="42"><img src="../_themes/capsules/capbul1a.gif" width="20" height="20" hspace="11"></td><td valign="top" width="100%"><!--mstheme--><font face="arial, helvetica">The current economic circumstances (and in particular the almost complete absence of inflationary pressure) imply that in the short term the MPC will be cutting rates well into 1999 (perhaps down to 5% or lower) in an attempt to stave off a damaging deflationary spiral in the economy. Latest evidence from the British Retail Consortium provides further evidence of falling prices for many consumer goods and durables.
<!--msthemelist--><tr><td valign="baseline" width="42"><img src="../_themes/capsules/capbul1a.gif" width="20" height="20" hspace="11"></td><td valign="top" width="100%"><!--mstheme--><font face="arial, helvetica">A sharp but short-lived recession could see nominal interest rates fall close to 4% by the end of the year.<!--msthemelist--></table><!--mstheme--><font face="arial, helvetica">
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