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Interest rates: what the experts think

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Stuart Porteous, RBS head of group economics:

 

"Few people – and certainly not the MPC – question the challenges the UK faces in 2009. As rates head towards zero, policy makers will be forced to embark on ever more unorthodox measures to get the economy moving again. Listen carefully and you can almost hear the printing presses being cranked up."

 

Stephen Gifford, chief economist at Grant Thornton:

 

"This 0.5% cut is another major step intended to stimulate the economy out of recession. But the MPC's monthly cutting of rates to an all-time low has so far done little to get the economy back on track. It has provided some breathing space for some lucky borrowers with tracker rates, but it has not had the desired effect on bank lending or helped consumers to start spending again.

 

"The Bank of England is now close to running out of options. If these latest cuts do not work, the only path left is for quantitative easing, where the Bank effectively prints money and uses this to buy up long-term assets in the market place."

 

"Quantitative easing is a high-risk strategy riddled with economic, practical and political problems. There is the serious danger that inflation will rocket in two years' time, as policy makers have very little experience of implementing this policy and will be unable to calibrate how much easing is appropriate. It will also undermine the independence of the Bank of England, as the government would have to work closely with the Bank to make this happen, fundamentally changing the function of the MPC."

 

"Recent reports from the high street of a poor Christmas trading period and of the continuing battering in the property market will do little to boost confidence in these uncertain times and show that the population at large is waiting for more radical steps to bolster the economy before spenders are back out in full force."

 

More:

 

Interest rates: what the experts think | Business | guardian.co.uk

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