12 Nov

Bank in rate cut hint

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.
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