27
Oct
Former MPC member in zero rate forecast
A former member of the Bank of England's monetary policy committee
(MPC) has said the situation in the UK economy may lead to the MPC
lowering the base rate to zero.
Stating that "interest rates will go down from now, by how far and
how fast nobody knows", Charles Goodhart, one of the MPC's
nine-member committee when it was first established in 1997, argued
that the situation where the rate may fall to zero would be a
replication of what happened in Japan in the 1990s.
Although this prediction may go further than the MPC would consider
cutting the base rate, it is one of several made recently by
economists that suggests the base rate has a long way to fall in
the months ahead, meaning mortgage rates could be lowered
substantially.
Investec economist Philip Shaw suggested last week that the MPC
will need to "continue to cut rates aggressively".
The next MPC meeting is on November 6th.
