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3 April 08 - Call For Bank To Cut Interest Rates
A leading figure in the Bank of England has called for
interest rates to be gradually cut despite the risks to
the economy.
Paul Tucker, the BoE's executive director for markets,
said the risk of inflation prevented the central bank from
lowering the base rate sufficiently to completely offset
the impact of deteriorating credit conditions.
As a result, central bank policy would be to "offset
some but not all" of the credit crunch's impact - indicating
that rate setters are treading a fine line between keeping
inflation in check and protecting the economy as a whole.
Meanwhile in the United States, Ben Bernanke, chairman
of the Federal Reserve, has admitted for the first time
that a recession is "possible".
He told a committee in Congress that the US economy will
not grow much, if at all, during the first half of this
year and "could even contract slightly".
Although Mr Bernanke said he hoped inflation would moderate
in coming quarters, he acknowledged that high energy prices
had clouded the inflation outlook.
"We are fighting against the wind," he said.
News items supplied by SelectNews, produced by PA Business,
part of the group that owns The Press Association, the UK's
national news agency. Copyright (c) PA Business 2007.
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