The Bank of England is set to reduce interest rates to yet another record low at lunchtime; but with their rate-cutting ammunition all but exhausted, governor Mervyn King and his colleagues are expected to press the button on a much more drastic policy - quantitative easing, reports The Times.
As the recession deepens, weakening wage growth, plunging oil prices and consumer demand are threatening to drag inflation well below the Bank's 2% target. With interest rates already at a historic low of just 1%, the monetary policy committee (MPC), which started its two-day monthly meeting yesterday morning, believes further cuts will not be enough to kick-start the economy. Alistair Darling, the chancellor, has to give his permission for taxpayers' money to be put at risk, so he and King will exchange quick-fire letters tomorrow morning, detailing how much the Bank can spend on quant...
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