Businesses should get some respite from the credit crunch with the Bank of England set to cut interest rates tomorrow, one expert predicts.

Speaking on Radio 4's Today Programme, Richard Lambert, director general of the Confederation of British Industry, explained that he fully expects rates to fall, although the decision is likely to be a "difficult" one.

He said: "In the short term inflationary pressures are rising and will probably continue to rise, but the bank has to look forward for a year or so because that's how long it takes for interest rates to have an impact on the economy."

Mr Lambert added that the threat of a slowing economy, combined with lower demand and weakening inflationary pressures this time next year means that there is "a good argument" for cutting rates now.

The Bank will not cut rates by anymore than 0.25 per cent as doing so would come as a surprised to people and surprises are not welcome at such volatile times, he concluded.

Yesterday, the British Chambers of Commerce called on the Bank to cut rates as a matter of urgency.

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