Economists at Capital Economics are forecasting another big rate cut by the MPC when they announce their decision on interest rates this week.
This follows on from last month's half point cut in a move that was co-ordinated with both the US Fed and European Central Bank to ease the problems in the global banking system.
However, Capital Economics makes the point that minutes of the last MPC meeting do not suggest that the half point cut was completely down to international pressure.
In fact, the unanimous vote on the cut came after a dovish discussion of inflation. The MPC, it seems, concluded that the risks had "shifted decisively to the downside," and this justified a hefty cut.
With concern that inflation could even fall short of its target in the future, and the Government's bank recapitalisation plan yet to prove itself, the MPC's conclusions open the way for another aggressive 0.5 per cent rate cut this week.
This would take the base rate to four per cent in November. However, Capital Economics believes that further rate cuts are in the offing as the economic downturn intensifies.
They highlight how the MPC reacted with aggressive rate cuts in light of both the Asian crisis of 1998 and terrorist attacks of 2001 to suggest that this time around rates could go as low as 2.5 per cent or possibly even lower by next year.
