CBI expects three rate cuts by early '09

Due to the slowing economy and positive long term inflation expectations, the CBI says interest rates will be cut in Q2 and Q4 this year, with a further reduction early next year. The CBI has downgraded its 2008 UK growth outlook, lowering expansion from 1.8% to 0.2%. It says the UK economy faces a “bumpier ride” in the next two years, due to continued credit market troubles, rising commodity prices and weak domestic and global demand. The industry body has also downgraded 2009 GDP growth to 1.7%, below the Chancellor’s “more optimistic” 2.25% to 2.75% Budget forecast. While the CBI...