Presenting an extremely downbeat quarterly forecast, Mervyn King, the Bank governor, said the projections “imply that further easing on monetary policy may well be required”.
He acknowledged that with official interest rates already at 1 per cent, further cuts in rates would not make much of a difference. The action to be taken by the Monetary Policy Committee would instead be quantitative easing, the creation of cash to buy government bonds and private sector assets.
Future measures, Mr King said, were “likely to include actions aimed at increasing the supply of money in order to stimulate nominal spending”.
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