Gold News

Bank of England forecasts troubled waters, rate cuts loom

A report from the Bank of England yesterday (November 15th) showed worrying analysis of the global economy and particular weakness in the UK.

With the US Federal Reserve leading the way in interest rate cutting in order to stimulate lending, the Bank of England could be the next to follow suit – with yesterday's comments highlighting poor growth prospects for 2008.

Bank of England governer Mervyn King said: "Serious weakness in the US housing market was the trigger for the financial turmoil and tightening of credit conditions that is now underway".

Many have interpreted his subsequent explanation of the poorest growth prospects for several years as an indication that interest rates will have to be cut at least once.

With the Bank of England report hitting markets and influencing inflationary perceptions, the British pound dropped a cent against the dollar last night, trading down at $2.0563, while the weakened greenback continued its decent against the euro.

Federal rate cuts in the US have been the opted for response to the throes of credit crisis – with an easing of borrowing attempting to stimulate market investment but also leading many to buy gold, with its anti-inflationary hedge value.


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