Belfast Briefing: Hopeless romantics in the North will be longing for a cut in interest rates this week just ahead of Valentine's Day.

The Bank of England's monetary policy committee will meet on Thursday to decide whether the rate, which currently stands at 5.5 per cent, should be cut or left unchanged.

There are strong expectations that the rate will be cut by a quarter of a percentage point.

Interest rate decisions are rarely a topic which inspires romance so why should it be any different this month? This is where the red rose theory comes in to play.

If there is a quarter-point rate cut and the full benefit is passed on by lenders then it could mean a saving of £10 to £15 a month on the average £100,000 (€133,000) mortgage.

According to Interflora a "dramatic dozen" of red roses will cost £39.00. The credit crunch and the slowdown in house prices has had an impact on disposable incomes and how people are spending their cash.

But any cut in rates tends to boost consumer spending and if the Bank of England does decide on a reduction it may come just in time to put a little sparkle back into the high street for Valentine's Day.

Alan Bridle, an economist with Bank of Ireland says the North should not bet on the Bank of England following US trends where interest rates have been cut twice in nine days.Rising unemployment across the US and a housing market slump has had a massive impact on consumer spending.

Bridle says that unlike the US the UK is not teetering on the brink of recession but is experiencing "slowflation".

"This is where lower growth prospects exist alongside stubborn inflation pressures. It is an uncomfortable position for the Bank of England which has to decide where the biggest threat lies and where to point its guns."

He believes the bank will move in favour of an interest rate cut by a quarter-point.

Bridle says business and personal borrowers should enjoy this cut because it is not the beginning of a series of "rapid-fire" rate reductions.

"In today's credit environment not all borrowers here will benefit from a cut in official rates. 2008 is shaping up as a year when access to credit is just as important as its price. The impact of official rate cuts on stimulating the economy may well be blunted."

The ongoing debate over UK interest rates comes as the housing market in the North becomes increasingly nervous.

There is a very definite slowdown in some areas, many larger building firms have begun to lay off temporary contract workers and there is a nervousness dominating the market.

Government statistics for July to September of last year shows there was a noticeable drop in the number of intended new domestic housing starts.

Anecdotal evidence supports suggestions that builders are no longer developing sites at the same rate they did during the price boom in 2006 and many have adopted a wait and see approach.

Recent industry research which showed that house prices grew faster in the North than any other part of the UK last year only underlines how dramatic the current slowdown is.

According to the Halifax, one of the biggest mortgage lenders, Co Armagh and Co Tyrone saw some of the biggest increases in house prices - up a respective 331 per cent and 315 per cent.

This increase should also be viewed in context. Before the peace process prices in these counties were probably lower than the average.

The Halifax estimates the average house price today in Co Armagh is £220,229 - still reasonable by some standards.

Many experts including Nationwide Building Society have warned that house prices could fall by as much as 5 per cent this year.

There may be some reassurance in the Executive's Programme for Government that has committed £1.8 billion to build 10,000 social and affordable houses over the next five years and also allocated an additional £140 million to modernise hospitals.

But it is the overall slowdown in the domestic market which is causing the greatest concern.

Any cut in interest rates will be welcomed but it is not going to allay growing fears that the North's housing market is facing a rough ride ahead.