AM Online

Bank of England hints at further rate cuts

The Bank of England was considering a cut in interest rates to 2.5% before the last cut was announced on November 6 from 4.5% to 3%.

The announcement comes from the minutes from the Bank of England’s interest rate cut meeting earlier this month.

The Bank of England's own calculations showed that a cut to 2.5%, or even lower, would be needed in the future to stop inflation falling too far below its target next year.

Audrey Childe-Freeman from the bank Brown Brothers Harriman told the BBC: "It's confirming that we're going to see more rate cuts from the Bank of England, and more aggressive rate cuts.”

The Bank of England minutes said: "Some members thought there was an argument for leaving some of the required policy loosening to the months ahead to support confidence as the economy weakened."

There was also concern that if rates had been cut by any more, there could be too sharp a fall in the value of the pound, which would create inflationary problems.

In addition, the committee's members were worried that a bigger cut could be "misinterpreted" and that this could damage its credibility.

Analysts are expecting interest rates to continue to fall to 1% or below next year. The Bank of England’s position on cutting rates may change following Alistair Darling’s pre-budget report on November 24.

If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.

Comment as guest


Login  /  Register

Comments

No comments have been made yet.