Interest rate 'to hit all-time low'
Updated on 12 November 2008
Interest rates could tumble to record lows next year as policymakers fight to ward off a severe recession, the Bank of England has signalled.
Based on market expectations of rates before the Bank's dramatic 1.5% cut to 3% last week, its forecasts show inflation falling to less than half its 2% target as food and energy prices fall back and demand eases in a looming slowdown.
Before the Bank's mammoth cut last week, markets assumed rates would fall to around 2.75% by the end of next year. Many experts now predict rates tumbling below the all-time low of 2%, and the Bank's forecast offers support to this view.
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