Bank of England Cuts Rates, Says Inflation Will Slow
By Brian Swint and Jennifer Ryan
Dec. 6 (Bloomberg) — The Bank of England cut its benchmark interest rate for the first time in two years, saying inflation is likely to slow as higher credit costs hurt economic growth.
. . . The slowest services growth in four years and surging money market rates led Bank of England policy makers to set aside concerns about faster inflation expressed just last week by King. With consumer confidence at its lowest since 2004, banks including Morgan Stanley say house prices may decline next year.
“This is likely to be the first of several rate cuts,” said James Knightley, an economist at ING Financial Markets, who changed his forecast yesterday and predicted a reduction.
Even the steady old Brits have begun to panic.
Claiming that the fire is likely to die down by throwing gasoline (or petrol) on it, seems very un-Bank of England-like, but one must not be bound to tradition.
Tradition holds that cutting interest rates is a spur to inflationary pressures, but then Brit traditions, like plum-puddings, are on shaky ground as the Brown government tries to recover its aplomb.
Thus Ben Bernanke is a shoo-in to lower American rates, further devaluing the dollar and speeding our decline as a favored currency.
“How do I decline thee? Let me count the ways;”
- As a relevant player in the international economic scene
- As a leader of principled banking
- Evolving from largest lender nation to largest borrower nation
- Not bothering to fund a war more costly than WWII
- Giving away what little money was found under the rug to the rich
And now–most frightening of all–the Brits are beginning to emulate us.