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Bank of England 'running out of options'

Bank of England 'running out of options'

Category: Economy

Updated: 06/03/2009
First Published: 06/03/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Bank of England is unlikely to cut interest rates any further, it has been suggested.

Yesterday the Bank's monetary policy committee opted to halve the base rate to 0.5 per cent - its lowest ever level.

And with the announcement that it would seek to boost lending by printing more money, Liberal Democrat shadow chancellor Vince Cable stated that it has "now run out of conventional weapons".

Describing the move as "understandable", he remarked: "Even with interest rates at a record low, the banking system is still in chaos with many families struggling to make ends meet."

Meanwhile, chief economist at the Royal Institution of Chartered Surveyors Simon Rubinsohn noted that increasing the amount of money is "vital".

Such steps are in part designed to improve the availability of finance such as secured loans and he added that this may come with enhanced confidence.

But Neil Young, chief executive of Young Group, warned that the five previous rate cuts have not succeeded in encouraging lenders to provide credit.

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