Rates could be cut more – Carney

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Published: Thursday 12th February 2015 by The News Editor

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Interest rates could be cut further from the current level of 0.5% should low inflation persist, Bank of England governor Mark Carney said today.

Mr Carney said the Consumer Prices Index (CPI) measure of inflation was “more likely than not” to turn negative at some point in the spring.

Latest projections in the Bank’s quarterly inflation report suggest that CPI will average at around zero in the second and third quarters this year before starting to climb towards the end of 2015.

Mr Carney said the current period of low inflation – boosting spending power – was positive for the economy. Latest official figures show it fell to 0.5% in December – equalling an all-time low.

But should it be more persistent than currently expected, the Bank’s monetary policy committee (MPC) would need to provide “more support”.

The Governor said the Bank could decide to expand its £375 billion money printing policy, known as quantitative easing, or cut its Bank rate further towards zero from its current level of 0.5%.

Published: Thursday 12th February 2015 by The News Editor

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