Wednesday, January 7, 2009
The Government may resort to printing extra money if interest rates keep falling.
It is being considered as a desperate measure if base rates fall so far that they cease to work as an economic lever.
Base rates are set to plunge tomorrow to the lowest level since the Bank of England was founded in 1694, with another big cut of at least half a point to 1.5 per cent or even lower.
Chancellor Alistair Darling and Bank of England governor Mervyn King are considering whether to embark on a new policy of expanding the money supply, or quantitative easing, sources today told the Evening Standard.
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‘We are looking at the issues,’ a senior Treasury source told London’s Evening Standard. ‘No decisions have been taken.’
It would mean a historic retreat from the economic housekeeping rules that have held sway since Margaret Thatcher wrested control of the money supply in the Eighties in her crusade to drive out inflation.
This article was posted: Wednesday, January 7, 2009 at 12:50 pm