Bank of England (BoE) base rate to 0% if necessary

The Governor of the Bank of England Mervyn King delivered the Banks Quarterly Inflation Report to the nation saying that “people should be concerned” about the economy and that “the world has changed” he also warned of hard times ahead.

In the bleak report he Mr King strongly hinted that the Bank of England will probably have to cut the interest rate cut again and it could be cut below 2 percent to kick-start the tumbling economy.

Mr King went so far as to say they would be prepared to cut the rate to 0 percent or whatever is necessary to keep the Britain out of a long recession.

The Governor said that next year a further £25 billion is likely to be wiped off the country’s output with the economy shrinking 2 percent in 2009.

He also warned that Britain is already in recession, and warned that we could be facing deflation which has not been seen in the economy since 1947, this is a sustained period when prices fall.

Source: telegraph