Speculation grows over further Bank cut

News Article - Thursday, November 20, 2008

filed under: Regulatory

Speculation has grown that the Bank of England will make further cuts to interest rates following the release of minutes from the meeting where they were lowered to three per cent.

The document reveals that, while all of the Bank's nine-member committee voted for the cut, they discussed making it even larger.

According to the Bank's figures, a cut to 2.5 per cent or below would be necessary to deal with inflation, but the committee felt that it would be too large as a one-off reduction.

"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," the minutes read.

Despite backing down on the larger cut, it was still the biggest since 1981 and left rates at their lowest value in over 50 years.

A number of figures in the financial world believe that the minutes prove further reductions are to come.

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