Minutes of July’s Bank of England’s Monetary Policy Committee meeting – which were released earlier this week – show that the committee are prepared to visit a further reduction in rates, amid a backdrop of recession and falling inflation.
The move to reduce the interest rates further would mark a key shift in the Bank’s policy stance; and it would also be the first move of interest rates since March 2009 when they were slashed to their current low.
According to the minutes, one of the decisive reasons for the change in stance is the recently unveiled “Funding for Lending Scheme” which is due to be launched in August and should limit any damaging impact a rate cut might have on banks’ or building societies’ ability to lend.
Within this months meeting, the MPC concluded that: “the impact of the Funding for Lending Scheme and other policy initiatives might, in time, alter the Committee’s assessment of the effectiveness of such a rate reduction.
"The Committee could review this option again when the impact of the Funding for Lending Scheme and other policy initiatives was more readily apparent; that was unlikely to be for several months.”
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