Three cuts in rates is prediction

By Simon Tostevin

UK INTEREST rates could fall by 0.75% in 2008, according to Brewin Dolphin chief strategist Mike Lenhoff. He believes that threats to the economy could lead the Bank of England to cut rates as many as three times, moves that would be welcomed by homeowners and businesses.

While no one can precisely predict the state of the economy throughout the year ahead, there are more worrying indicators then reassuring ones.

Given the current climate, Mr Lenhoff predicts that rates could come down to 4.75% by the end of 2008.

‘I view this as a period of consolidation following four years of a bull market, as the transition phase to the next stage of the bull market.

‘I expect the S&P 500 to reach all-time highs and to end 2008 somewhere around 1,650.

‘If Wall Street goes my way later this year, then I think the FTSE 100, whose large international blue chips have more to do with the prospects for the global economy than the UK, could be up around 7,200 by year end.’