Bank of England cuts rate 150 basis points

Nov.6, 11:22

The Bank of England facing the signs of a growing and deep recession decisively cut interest rates from 4.5 % to 3.0 %. This was a wise decision that will help slow down recessionary pressures and send the right signals to both consumers and borrowers. The commercial banks however have been slow to announce that they will pass on the entire rate cut to their customers. This needs to happen in order that monetary policy can be effective. Hopefully the European central bank will follow Britain's lead and cut their rate as well. The stock markets continue to be pessimistic and bearish with the Dow falling over 850 points over the past two days. As central banks cut rates and governments announce stimulative deficits it is essential that the Fed, the Bank of England and other central banks buy enough of the issued debt to drive down market rates and maximize the stimulative impact of the public finance stance. This may only need to be a short term measure which can easily be reversed as conditions improve.As part of the disinflationary circumstances NYMEX oil dropped today below $60 for the first time since 2007.