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Bank of England hints at rate cut

Bank of England Governor hints at rate cut as global markets bounce back

UK Daily Mail
January 23, 2008

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Bank of England Governor Mervyn King has given the strongest indication yet that an interest rate cut is imminent.

In a speech to the Institute of Directors in Bristol last night, King appeared to put pressure on the Committee to follow the Fed and cut rates.

He said that although inflation remains an “issue” the current interest rate of 5.5 per cent is “probably bearing down on demand.”

Although London’s leading shares jumped almost 100 points as the market opened the FTSE has continued to slide since then.

At 9.30am today it had dropped to 5702 after opening at 5839

In Asia, investors woke up to news of the shock rate cut this morning and the Nikkei index in Japan, the Australian Stock Exchange and the benchmark Hang Seng in Hong Kong leapt as investors scrabbled for bargains.

After Monday’s stock market turmoil, the U.S. Federal Reserve hit the panic button yesterday, slashing rates by 0.75 percentage points to 3.5 per cent.

The move has led to increasing pressure on the Bank of England to cut interest rates by 0.5 per cent.

In a desperate bid to calm the global stock market meltdown, the rate cut was even bigger than the emergency cut which followed 9/11.

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