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Why the Bank of England may cut rates next month
Interest rates | Holding operation | Economist.com

FORGET BC and AD. For the financial markets, the date dividing two eras is August 9th, when the financial markets seized up. Before then the City was sure that the base rate would rise this autumn to 6%. Instead, the Bank of England's rate-setters decided for the third month running to keep it at 5.75%, when they met on October 4th. As far as the City is concerned, the question now is not whether the base rate is coming down but when.

The do-nothing decision by the bank's monetary-policy committee (MPC) may seem cautious, given that in America the Federal Reserve has already cut interest rates by half a percentage point. But the American economy has been weakening because of a sharp downturn in the housing market. In contrast, the British economy has been in fine fettle until this summer, not least because of the continuing buoyancy of house prices.

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Interest rates | Holding operation | Economist.com