4 Mar

Bank 'could switch to monetary easing'

Bank 'could switch to monetary easing'

The Bank of England could soon alter its approach to monetary policy by using monetary easing - pumping extra cash into the economy - as an alternative to interest rate cuts to fight possible deflation, it has been suggested.

Chancellor of the Exchequer Alistair Darling told the Daily Telegraph that the power to do this has been given to the Bank by the government and that such a move may happen soon.

He stated: "We've given them the levers. They may decide this month that it's appropriate to do so."

The paper stated that experts believe the monetary policy committee (MPC) will lower the base rate to 0.5 per cent tomorrow, which could help lower the cost of mortgages for first-time buyers.

A cut would be the sixth in a row that the MPC has decided to make, with the base rate having fallen from a level of five per cent since the start of October.

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