The Bank of England’s Monetary Policy Committee could be considering lowering the base interest rate even further to 0.25 per cent.
The nine MPC members met this month, and recently released details of the meeting revealed that they discussed the possibility of cutting the base rate down to half of its current 0.5 per cent figure. The base rate, which was lowered to its current historic low in March of 2009, has been at its lowest since the founding of the BoE in 1694.
Luckily, the MPC remarked that further lowering the base rate, which would be disastrous for personal and business bank account owners, would be a highly unlikely occurrence. However, Committee members did intimate that another bout of quantitative easing – otherwise known as printing money – may soon become a certainty.
Additional purchases of assets in order to facilitate looser monetary conditions may become warranted soon in the future, the minutes of the meeting revealed. Despite this, only one member of the MPC, Adam Posen, actively voted for an additional round of quantitative easing.
The BoE will most likely approve the quantitative easing, even though inflation would be sure to rise and thus erode interest on the savings accounts of the nation even further. The Bank has already poured £200 million into the UK economy, yet up to an additional £100 billion could soon be added to that figure as early as this coming October.
The Coalition government seems to be more and more frantic in regards to finding methods to revitalise the economy, according to industry experts, as the Euro zone debt crisis continues to threaten to drag the UK down with it. Net borrowing rose to £15.9 billion last month, in the UK public sector, up from £14 billion in August 2010, prompting economists to warn that the 2011 deficit target of £122 billion set by the Treasure could be missed, as recession recovery efforts continue to falter.