Fears rise over further cut in interest rates

One month after the Bank of England made a surprise cut in interest rates of 0.25%, experts are warning of the increasing likelihood of a further cut.

Recent predictions that the Monetary Policy Committee would keep rates at 3.75% are now being replaced by growing speculation that rates will be reduced.

Slowdowns in consumer spending and the service sector, and the fragility of the manufacturing industry, have increased the possibility of another cut.

The news comes after a recent warning by the International Monetary Fund of a possible house price bubble.

Recent reports generally suggest that the housing market may be slowing down. The Nationwide announced that house prices had risen at just 0.4% last month - the slowest rate since October 2001 - although figures released by the Halifax show a rise in house prices of 1.7% during February.

The European Central Bank, which retained its interest rates last month, is expected to follow suit.