Bank unlikely to cut rates – yet
The governor of the Bank of England has rejected calls from some quarters for a further cut in interest rates in the very near future.
Mervyn King said that in spite of the difficult time the economy is facing and the decrease in consumer spending growth that this will entail, he will not introduce a rates cut to rectify the situation.
He told the House of Lords Economic Affairs Committee that some people seem to think that the interst rates are set to boost demand and consumer spending, when it is in fact used to keep inflation in check.
Mr King told the committee: 'The idea that the [interest rate settings] can fine-tune the economy and can in fact ensure that the economy grows at some fixed rate every quarter is absolutely imaginary. It's important that people understand what we can do, but also what we can’t do.'
His comments have seen analysts reluctantly put back their expectation of future cuts in the underlying cost of borrowing.
Howard Archer, chief UK economist at consultancy firm Global Insight, commented: 'While we still do not completely rule out an interest rate cut before the end of this year, we have joined the throng in moving our expectation of the next 0.25 per cent reduction to February.' | 
