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Are interest rates set to fall by a further 1%?

There appears to be a growing consensus in the City that UK base rates will fall by at least 1% at the next MPC meeting with the potential for further falls if this does not stimulate any type of improvement in the UK economy. Taking rates down to 2.5% is unheard of in recent times and with the potential to move them lower this is a reflection of the serious nature of the ongoing recession.

The Bank of England have become more proactive over the last few weeks and been more vocal in their comments to the press and media. It appears that all of the political parties, the Bank of England and regulators are singing from the same hymn sheet on a broad basis even though there are disagreements on the ground.

As each day goes by there seems less chance of the recession being a short sharp shock and more risk of a possible depression which would be catastrophic for the UK economy. This is not to suggest that the UK is the only economy in the world suffering such woes put the UK appears to be more exposed due to a lack of strength in depth on the government budget side.

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