28 October 2008
Interest rates could fall as low as 0% as the Bank of England looks to stave off what is widely believed to be an inevitable recession, it has been claimed. According to Charles Goodhart, a founding member of the Monetary Policy Committee (MPC), rates could come down to their lowest level since 1964, when the Bank of England was founded. He told Channel 4's Dispatches programme that interest rates were cut to 0% in Japan in the 1990s when the country suffered a severe downturn. Commenting on the situation in the UK today, he said: "Interest rates will go down from now, by how far and how fast nobody knows. They could go to zero." A base rate of 0% would provide welcome relief for borrowers with secured loans as such dramatic cuts may prompt lenders to reduce their own rates. Mr Goodhart's remarks come after official figures revealed that national income fell by 0.5% between July and September - prompting economists to claim that the UK is officially on the brink of a recession. The common definition of a recession is two consecutive quarters of negative growth.
© 2008 Adfero Ltd
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