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In response to
"European Central Bank cuts key lending rate half a percentage point to 3.25%, AP reports. -- nm"
by
ty97
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that aint nuthin. bank of england slashed theirs 1.5 percentage points....
Posted by
x (aka dmuck)
Nov 6 '08, 05:54
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it's getting pretty darn desperate out there.
The Bank of England unexpectedly cut the benchmark interest rate by 1.5 percentage points to the lowest since 1955 as policy makers tried to limit damage caused by the worst banking crisis in almost a century.
The nine-member Monetary Policy Committee, led by Governor Mervyn King, reduced the bank rate to 3 percent, the biggest decline in more than a decade. None of the 60 economists surveyed by Bloomberg News predicted the move.
``It's absolutely staggering and deeply impressive,'' said Brian Hilliard, director of economic research at Societe Generale in London. ``They are clearly grasping the nettle and taking deep action. Boy, this is going to have an impact.''
The seizure in credit markets has left Britain on the edge of its first recession since 1991, prompting a 50 billion-pound ($80 billion) bank rescue package from the government and a half-point emergency rate cut on Oct. 8. With the economy headed into recession, the danger is that inflation will slow more than policy makers want.
``The risks to inflation have shifted decisively to the downside,'' the Monetary Policy Committee said in a statement. Policy makers ``judged that a significant reduction in Bank Rate was necessary now in order to meet the 2 percent target'' for inflation.
The pound dropped immediately after the decision before rebounding. It traded at $1.6011 at 12:30 p.m. in London compared with $1.5898 before the decision.
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