BoE Under Pressure to Cut Interest Rates as Loans Dry Up

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Mon, 27 Oct 2008

The Bank of England is under increasing pressure to perform an emergency interest rate cut after the FTSE 100 fell to a five year low. The decline in the London stock market was also seen in New York and the Far East, as the widespread financial turmoil continues to grip the global markets. Expects have predicted that the US Federal Reserve will perform a dramatic interest cut this week, dropping rates to just 1 per cent according to some analysts.

The US Federal Reserve coordinated their last interest rate cut with the European Central Bank and the Bank of England, and banks will be hoping for similar action again. The Federation of Small Businesses called for a cut of up to 1 per cent, whilst Sir Richard Branson called for the Bank of England to be bold in order to avoid a recession .

Gordon Brown yesterday hinted at another interest rate cut, declaring that inflation is ‘coming down over the next few months and that will mean that it gives scope to all the monetary authorities, including the Bank of England, to make a decision about interest rates’. Meanwhile, Mr Brown is set to deliver a speech to business leaders today, and is expected to call for businesses to carry on borrowing in order to maintain growth and output.

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