Base rate 'to hit 4% by end of next year'

The key base rate of interest could come down to around four per cent by 2009. Relief is on the way for beleaguered homeowners but they should not expect dramatic cuts of the kind imposed by the Federal Reserve in the near term.

The extended muted economic activity will eventually markedly dilute underlying inflationary pressures and lead the Bank of England to cut interest rates further.
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The benchmark rate of interest currently stands at five per cent.