Howard Archer Basis Quotations

Nevertheless, limited core inflation in January will not deter the ECB from hiking interest rates by a further 25 basis points on Thursday.

This subdued growth is expected to help to contain underlying inflationary pressures and risks, underpinning our belief that interest rates will be cut by a further 25 basis points in February or March.

We still believe UK interest rates will eventually be trimmed by a further 25 basis points, although not until August at the earliest.

We believe that interest rates will eventually come down by a further 25 basis points to 4.25%.

While the fourth quarter GDP data and the relatively healthy mix of the components further diminishes the chances of a near-term trimming of interest rates, we still believe a 25 basis point interest rate cut is very possible in May.

The earnings data may encourage the Bank of England to hold off from cutting interest rates in the immediate future as March while it seeks sustained clear evidence that the pay settlements for 2006 are remaining contained (the early signs are that wage moderation is continuing). However, we believe that interest rates are likely to be trimmed by a further 25 basis points by May.

This is likely to put a floor under house prices, but we remain highly doubtful that house prices will move substantially higher on a sustained basis any time soon. If house prices start to accelerate markedly, we believe buyer interest will soon diminish, thereby keeping a lid on prices.

This underpins our belief that the Bank of England is too optimistic on the growth outlook and will eventually end up trimming interest rates by a further 25 basis points.