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LONDON (MarketWatch) — The Bank of England’s rate-setting Monetary Policy Committee is likely to slash its key lending rate by a full percentage point to 3.5% at its monthly policy meeting Thursday, Citigroup economist Michael Saunders said Friday in a weekly research note. Although the MPC has never cut by more than a half-point, the economic and financial crisis is “unusually severe,” Saunders said. “Under these conditions, the MPC probably will be ready to ease at an unprecedented pace unless worries about currency weakness and the ballooning fiscal deficit dominate.” Regardless of the outcome Thursday, the MPC is likely to cut the key rate from its current level of 4.5% to around 2% by mid-2009, he said.

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Technorati Tags: Bank Of England, Citigroup, Currency, Current, Economist, England London, Financial Crisis, Fiscal Deficit, Half Point, London England, Michael Saunders, Monetary Policy Committee, Mpc, Percentage Point, Slash, Unprecedented Pace, Worries