Bets on for a cut in interest rates

The Bank of England's Monetary Policy Committee will announce its decision at noon on Thursday, when a majority of economists expect a quarter-point cut in the current 5.5 per cent rate.The City has started to expect a rate cut even though figures published last week showed the economy may have come though the worst of the slowdown, with retail sales picking up and manufacturing order books showing tentative signs of life.


Thursday is also crucial for the European markets as the European Central Bank is also meeting to discuss interest rates. The rhetoric from the council members has changed in recent weeks and has been interpreted by the markets as evidence that the 3 per cent interest rate in the euro countries will be cut.


Even though the euro has been knocked to new lows by a stronger dollar and worries about the crisis in the Balkans, economists who believe European interest rates will be cut cite the decline in business confidence in France and Germany.


The FTSE 100's new intra-day high of 6,339, just above its record close of 6,335.7, might also be smashed by an inflow of investments at the start of the new tax year. The ISA - individual savings account - makes its debut and fund managers will be looking to reinvest dividends paid by existing share holdings.