Prime minister says still room for rate cuts
The base rate in the UK has fallen dramatically over the course of the last year, with the rate falling from 5.75% to 3%, with a recent huge interest rate cut of 1.5% this month alone. The Prime Minister, Gordon Brown, said that cutting interest rate was vital in order to weather the global financial crisis and the economic downturn, and he indicated that there was room for further interest rate cuts.
Speaking to the Council on Foreign Relations, the Prime Minister said: “There is scope there for, as the Governor of the Bank of England has said, a further reduction to interest rates and that’s an essential element of what we are doing.”
Earlier this month the central bank cut the interest rate by 1.5% taking it to its lowest rate in fifty years at 3%. With inflation likely to fall rapidly in the near future it is likely that the interest rate will fall further.
Mr Brown said: “There is no doubt that unless things change, some countries will have zero inflation.” He also stated: “We have reached the stage where monetary policy must be accompanied by fiscal policy.”
Prior to the recent G20 summit he also said: “This is the time to change the international order to bring it up to date. This is an opportunity we should not miss.”
Mr Brown hopes that the summit would enable the heads of state to pool ideas and discuss the global financial crisis with a view to reform in order to tackle the problem. The next Monetary Policy Committee meeting is due to take place in early December, and many analysts and economists have predicted, following the Prime Minister’s comments, that the base rate will fall once again in order to try and boost the economy.
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