Rates head for zero as Bank of England set to cut to 1%
The Bank of England's rate-setting committee will sit down this week to deliberate on interest rates, knowing that now it has an additional weapon in the armoury of tools it uses to target inflation.
An exchange of letters between Mervyn King, the Bank's Governor, and Alistair Darling, the Chancellor, last week confirmed that the Monetary Policy Committee (MPC) can increase money supply using “quantitative easing” to boost the economy if it wishes.
Economists take this, coupled with recent indications by several members of the MPC, as a further sign that interest rates are on the way to zero, meaning that it is now a case of forecasting when, rather than if, the Bank will cut rates further.
(More follows in the article.)
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