05/03/2009 - Bank to cut interest rates further
It is expected the Bank of England will cut interest rates by a further 0.5% and announce plans to start quantitative easing measures in a bid to revive the struggling economy.
Rate-setters on the Bank's Monetary Policy Committee (MPC) are likely to vote for a 0.5% cut, pushing rates to a new all-time low and a sixth successive month of cuts. It is likely they will also agree the Bank should start printing more money in an attempt to increase the money supply to drag the UK out of a prolonged recession.
According to reports this week, Chancellor Alistair Darling will give the green light for the Bank to create up to £150 billion, with many banks still anxious to lend despite rates being at an all-time low.
The money "printed" will be used to buy Government and corporate bonds through its Asset Purchase Facility (APF), but the extent of the initial purchases has not yet been revealed.
Barclays Capital economist Simon Hayes said: "Within a regime that has prided itself on its transparency, it seems rather extraordinary that we are going into an MPC meeting without any clarity on these important issues."
Copyright © Press Association 2009
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