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Mervyn King suggests interest rates may fall further

Mervyn King, the Gov of the Bank of England, has this evening suggested that UK base rates could fall substantially as the need to inject confidence and liquidity into the economy becomes ever more critical. After a period in which the bank was seen to sit on the fence as inflation roared away we have seen a new and more aggressive stance from the Bank of England which has been welcomed by many.

This is a reflection of the dire situation in the UK and the fact that Mervyn King is actually talking about interest rate reductions well in advance of the next MPC meeting could suggest a short-term move prior to the next official get together. All parties in politics and economics are now coming together to try and find an answer to the quandary which is the UK economy and the depressed housing market. At the moment throwing money at the market does not seem to be working and would appear to be storing up substantial problems for the future.

The next six months are vital to the UK economy and the future of Gordon Brown and his Labour government who have reclaimed some of the more traditional Labour voters of late. The Tories appear to be on the back foot and struggling to maintain there once substantial lead in the opinion polls.

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