12Nov
Bank in rate cut hint
The Bank of England has hinted at the possibility that it may need
to cut interest rates again in the coming months.
In its quarterly inflation report the Bank said the level of
inflation will drop in the coming months, with the central
projection being that it will fall "sharply".
At the same time, the report noted, it is quite possible for
consumer prices index (CPI) inflation to plummet much further and
fall "well below" the one per cent floor of its target range.
Such a situation - which would require an explanatory letter from
governor Mervyn King to the chancellor in the same way a CPI level
above three per cent does - could lead to a further cut in
rates.
Last week economist Vicky Redwood of Capital Economics predicted
that the base rate could fall to "at least one per cent" and may
even be reduced lower than that.
