BoE cuts rates below Depression levels

The Bank of England cut its interest rate by 50 basis points to a record low of 1.50% in its latest effort to stimulate the British economy in the worst global financial crisis since the 1930's. BoE rates are now below rates during the Great Depression, which never ran below 2%. It is expected that they will cut rates further in February, and that rates may eventually fall to below 1%. Markets had priced in a bigger cut than 50 basis points, causing short sterling interest rate futures to turn negative after the decision. One problem with running such low rates is that there is little room to cut further, hindering the BoE's effectiveness in restarting the economy. The use of quantitative easing is now being discussed, although Chancellor of the Exchequer Alistair Darling tried to quieten speculations of printing money.