Bank of England consider alternative methods as rate cuts fail to revive UK economy
Disclaimer: THIS MATERIAL IS NOT INVESTMENT RESEARCH AS DEFINED BY THE FINANCIAL SERVICES AUTHORITY
The Bank of England’s MPC collectively agreed that quantitative easing should be used in conjunction with rate cuts. The governor has acknowledged that with interest rates approaching zero percent, the central bank will be forced into creating money to kick-start the economy in order to prevent inflation from falling too far below the governments 2% target. The government has given the Bank of England the mandate to begin buying commercial paper from struggling companies under a programme financed by the sale of government securities.
After being sold during the early part of last week, sterling has bounced back as the pressure increases on the Euro from all sides. The pound is currently trading at 1.13 against the Euro.
Against the US dollar, sterling is beginning to form a range as it fails to break below the 1.41 level. Towards the end of January sterling traded at 1.35 against the US dollar, the pound then rallied up to 1.4986. Sterling is currently trading at 1.42 against the US dollar.
Wednesday 18 February 2009, 03:19pm
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