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Will the Bank of England reduce interest rates?

It has been announced that the central bank of Australia has cut base rates in the country by one full percentage point overnight to try and avert a banking crisis in Australia. While this move does not impact upon the UK in any way it does pave the way for a slashing of rates in the UK to try and halt the slide of both investment markets and the economy.

Pressure has been mounting on the Bank of England for a few days and it seems as though, against their better judgement, they may cave in to demands from all corners of the UK. If the Bank does do decide to reduce rates it will be at the risk firing up inflation again, but when you consider the dire state of the UK economy we would be hard pressed to see much of an increase in consumer spending to fuel inflation again.

The Bank of England is now in a no win situation at the moment because it will receive no credit for reducing rates and only further criticism if they do not reduce rates. While the refloating of the economy is of paramount importance, people also need to remember the ongoing threat of inflation which could ruin any recovery in the economy.

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