AKC News // Bank of England cuts rates to record 1% low

The Bank of England cut interest rates by another half a percentage point today to a record low of 1%, aiming to help the British economy out of recession by getting consumers and companies to spend again.

UK interest rates have now fallen for five months in a row and by a total of four percentage points as the 18-month-old global credit crunch has brought the economy to its knees.

UK house prices are falling sharply, big-name businesses are failing and hundreds of thousands of people have already lost their jobs.

The International Monetary Fund has predicted the British economy will shrink 2.8% this year.

With rates approaching zero, the Bank of England is expected to resort to quantitative easing - controlling the supply of money rather than just its cost - to boost demand.

Central banks around the world are considering similar moves as the downturn is affecting most countries, prompting frequent comparisons with the Great Depression of the 1930s.

The US Federal Reserve has already cut interest rates to a record low of between 0-0.25%. In Japan, rates stand at just 0.1%. In the euro zone, interest rates stayed at 2% today but are expected to fall to a new record low next month.

Source: RTÉ Business

Date : 05-02-2009