BOE Cuts Rates to Record Lows

The Bank of England slashed interest rates further by 50 basis points for January. The overnight rate on the pound is now 1.5 percent and likely to head lower in 2009.

This is yet another installment in the race to zero percent interest rates globally. The Bank of England expects to undershoot it’s 2 percent inflation target for the medium term.

The immediate reaction of the pound was very positive. Nothing has truly changed fundamentally, the central banks are still catching up to the shock of the global shake up. The pound is likely to continue to range for now.