'Too early to talk about cut in UK interest rates' - analyst

A leading City analyst says it is too early to talk about an interest rate cut in the UK after the US Federal Reserve's surprise move to cut rates on the other side of the Atlantic.

As London shares surge, NatWest Stockbrokers head of research Jeremy Batstone says: "It is premature to talk about rate cuts in the UK."

He says the situation in Britain is significantly different to that in the US and, while the UK economy is slowing, it is "not in a tailspin".

"UK rates are set with the UK economy in mind," he says, adding that he expects rates to fall around Easter.

Mr Batstone says Federal Reserve chairman Alan Greenspan has "made a very very risky move" in cutting US interest rates. He adds: "It's a gamble of epic proportions. The rationale is fair enough, but the extent of the cut is slightly surprising."

Meanwhile, TUC general secretary John Monks is urging the Bank of England to follow the US Federal Reserve's lead in cutting base interest rates.

Mr Monks told BBC Radio 4: "We have got slowing growth in employment, our inflation is low and yet our interest rates are higher than in euroland and I think the time is right now for the governor of the Bank of England and his colleagues to be as bold as Mr Greenspan in the States.

"They are already below the Chancellor's target and their job is to try to keep to that target of 2.5% inflation. They have got loads of scope."

Mr Monks said the Federal Reserve's move was a sign that it was shifting its key target from that of avoiding inflation to one of avoiding recession. "Although we are not in recession in this country, as far as manufacturing is concerned things are grim and two out of three workers in manufacturing are working in factories where output is falling.

"That is what the Bank needs to address. By cutting interest rates they will also have some effect on the exchange rate and move us closer to where the euro is."