The Bank of England is expected to cut the base rate next week - but don’t expect it to mean easier or cheaper loans.

That’s the stark message from Mike Lazenby, chief executive of Kent Reliance Building Society. He says that whether any cut is half of one per cent or a quarter, it will make no difference to the banking crisis.

Experts believe the Bank’s Monetary Policy Committee (MPC) will cut the base rate when they meet on Wednesday - but they are divided as to just how much. It has stood at five per cent since April.

"I think half a per cent cut is what they should be doing but I suspect they will take the prudent approach and drop it by a quarter," Mr Lazenby said. "If I was sitting on the MPC, I’d be voting for a half per cent cut."

But he claimed that whatever the MPC did, it would be "completely irrelevant" because it bore no comparison the LIBOR - the London Inter-Bank Offered Rate - the rate at which banks lend to each other.

It is much higher at the moment because of nervousness in the banking market and the collapse or nationalisation of several high-profile institutions.

"Unless the Bank of England does something about LIBOR, then cutting the base rate will have absolutely no impact on the banks and upon mortgages and investments," Mr Lazenby.

But he revealed that the high LIBOR was good news for Kent Reliance because it was making reasonable money from lending to the market.

Although some tracker rates may come down with a base rate cut, he said Kent Reliance intended to keep interest rates stable. "We have no plans to make any changes," he added.

Meanwhile, a steep fall in manufacturing reported this week by purchasing managers, will put further pressure on the MPC to cut interest rates.

However, MPC members will also be worried about rising inflation - well above the two per cent target - which has so far restricted their room to slash the interest rate.